So far, 2023 has been very generous to crypto investors, who’ve been beaten and bruised throughout the entire 2022. Bitcoin, still the biggest cryptocurrency out there, is up by 73% year-to-date. The second biggest, Ethereum, has climbed 57% since the beginning of the year. And while BTC is part of our paid service Elliott Wave PRO, we published a free analysis of ETH in late-September, 2022, predicting a 50%+ rally.
Ethereum was trading around $1380 at the time, but its recent Elliott Wave structure suggested that it can reach “initial bullish targets near $2100.” In other words, “a surge of 50% or more“, we wrote, “is likely to follow soon.” The chart on which this prediction was based on is shown below.
Similar Elliott Wave setups occur in the Forex, commodity and stock markets, as well. Our Elliott Wave Video Course can teach you how to recognize them yourself!
Ethereum ‘s 4h chart revealed an impulsive recovery between $880 and $2032, labeled 1-2-3-4-5. It was followed by a three-wave correction, marked A-B-C, down to the 61.8% Fibonacci support level. Taken together, these two patterns produced a complete 5-3 Elliott Wave cycle pointing north. So, even if it turned out that the corrective phase of the cycle wasn’t over yet, it made sense to stay bullish as long as $880 was intact. And of course, it did turn out that Ethereum was still in retracement mode.
What we thought was a complete correction evolved into a five-wave impulse, marked i-ii-iii-iv-v in wave A. Wave B led to a surge to $1677 in early-November, 2022, before wave C down finally completed the negative phase of the cycle at $1072. Staying bullish throughout these wild gyrations was certainly not easy. However, with a reliable impulse pattern in place and $880 still intact, the odds remained in favor of a rally to $2100.
Pocketing the Ethereum Rally Required Patience
Less than seven months later, on April 16th, 2023, the price of Ethereum reached and exceeded our target. It rose to $2141, up 54% since our analysis, before falling back below the $2k mark as of this writing. All it took was an eye for Elliott Wave patterns and the patience and discipline required to take advantage of them.
This is how Elliott Wave analysis, or any other type of investing for that matter, really works. You identify a pattern or a security you think is reliable and then you leave it enough wiggle room in order to be able to wait it out until it bears fruit. You don’t chase illusions of precision that simply cannot be achieved. When it comes to predicting the future, being approximately right is more than enough. Trying to be more precise than possible and to buy/sell the very bottom/top is only going to lead to more stop-loss hits, therefore more losses for you and more fees for your broker.
Now, the recent drop from $2141 looks like the first two waves – 1/a and 2/b – of a bigger move. Whether it evolves into a simple a-b-c zigzag or a bigger selloff remains to be seen. In both cases, though, we can expect more weakness towards the support near $1600. Then, the market would have an important decision to make.
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