After the price of Bitcoin rose twenty-fold in 2017, the majority of crypto investors were expecting even bigger gains in 2018 as the digital currency was finally entering the mainstream. Alas, so far that is not the case as BTCUSD plunged by roughly 70% in just a month and a half. But instead of going straight to zero as many skeptics thought it will, the price found support in the $5900 – $6500 area. Bitcoin’s recent run started at $6427, but failed to conquer the psychological $10 000 mark and as of this writing, the largest virtual currency by market capitalization is hovering around $8600 a coin.
Fortunately for Elliott Wave analysts, Bitcoin’s hourly price chart, sent to subscribers on Wednesday, May 2nd, revealed a pattern which warned them about the upcoming bearish reversal. Take a look at it below.
Actually, the pattern in question was not complete back then, but given the bigger picture outlook, we thought the rally from $6427 was going to evolve into a five-wave impulse, labeled i)-ii)-iii)-iv)-v). The problem was that wave v) was still missing, so it made sense to expect one last push higher. On the other hand, the theory states that a three-wave correction follows every impulse, so instead of joining the bulls near the $10k mark, traders should prepare for a U-turn. The updated chart below shows how the situation developed.
On May 5th, BTCUSD climbed to $9958 on Bitstamp, to $9990 on Bitfinex and even slightly above $10 000 on some of the other exchanges, but soon after that the bears took the wheel and dragged the price to roughly $8500 so far. The only difference is that an ending diagonal wave v) replaced the triangle scenario for wave iv).
The mainstream media is trying to explain the crypto market’s plunge with the news of a suspected fraud by one of South Korea’s largest exchanges – Upbit. To the Elliott Wave analyst though, this is nothing more than a catalyst, because the stage was already set for a bearish reversal near $10k more than a week in advance.
What would Bitcoin bring next week? That is the subject of discussion in our next premium analysis due out on Sunday.
