The price of Bitcoin has been slowly losing ground since late-June when it touched $13 880. The bulls have been relying on the support near $9000 for over two months. They no longer have that luxury. BTCUSD was still gravitating around $10 000 on September 23rd. The next day, it plunged to $7998.
While the exact “cause” of yesterday’s decline is subject to speculation, there was a way to stay ahead of it all. When we applied the Elliott Wave principle to Bitcoin’s price charts, it gave us not one but two possible counts. Fortunately, both pointed in the same direction and had the same invalidation level. The chart below, sent to our subscribers on September 11th, depicts them.
The 4-hour chart of BTCUSD gave us an insight into the structure of the pullback from $13 880. One possibility was that it represented a sequence of first and second waves to the south. In that case, more weakness in wave iii of (ii) of 3 was supposed to follow. This count was going to remain valid as long as Bitcoin was trading below the top of wave (ii) at $12 325.
The alternative was that the decline from $13 880 was a simple zigzag correction with a triangle in the middle, whose wave “e” up was in its final stages. Here, too, Bitcoin looked vulnerable and was not supposed to exceed $12 325.
Bitcoin Bears Didn’t Care Which Count Was Correct
“Regardless of whether the drop from $13 880 is a sequence of first and second waves or a zigzag“, we thought, “it makes sense to expect more weakness towards $8000.” The updated chart below shows how the situation played out.
Two weeks after the Elliott Wave analysis led us to conclude that Bitcoin was very likely to decline, the price dipped below $8000. The invalidation level at $12 325 was never threatened and each of the two counts is still possible.
Unlike many others, Elliott Wave analysts usually admit there is nothing certain in the markets. That is why we often work with primary and alternative counts simultaneously. Sometimes they are contradicting, but sometimes they confirm each other, which makes the decision-making process a lot easier. That is exactly what happened in Bitcoin this month.
What will BTCUSD bring next week? That is the subject of discussion in our next premium analysis due out late Sunday!