It was September 1st, when the price of Bitcoin was hovering around the $5000 mark. Today is September 15th and the markets once again proved that for the cryptocurrency, two weeks is a very long time. BTCUSD just fell to $3051 on BITSTAMP and even lower on some of the other exchanges, erasing roughly 40% of the market capitalization of the biggest virtual currency.
Fortunately, this selloff did not come out of the blue. Back in August, while Bitcoin was slightly below $4400, we published “BTCUSD Ready for Another Terrifying Pullback”, where we applied the Elliott Wave Principle to the 4-hour chart of the pair and came up with the following prediction.
As visible, the impulsive structure of the recovery from $1830 suggested BTCUSD was supposed to approach $5000. On the other hand, the theory states that every impulse is followed by a three-wave correction in the opposite direction. That is why, instead of joining the bulls above $4500, we were getting ready for a “terrifying pullback”, which had the potential to “revisit the support zone near $3000 per coin.” The updated chart below shows Bitcoin’s price as it is today.
Picking tops is never a good idea, so we did not even try shorting Bitcoin near $5000. However, we are still glad Ralph Nelson Elliott discovered the Wave principle in the 1930s, because in 2017, his discovery saved us a lot of money by simply warning us that a bearish reversal was just around the corner. All it took was a price chart and the ability to interpret its message correctly.