bitcoin appears to be stuck in a consolidation zone between $50,000 and $52,000, with neither the bulls nor the bears managing to fully take control of the trend. This performance has sparked a number of speculations about whether the btc price has finally found a local high. One of those who has speculated on the price direction is crypto analyst Alan Santana, who has used Elliot wave theory to predict where the cryptocurrency's price will head next.
Elliot Wave eyes correction to $31,800
In the analysis bitcoin-s-2024-Elliot-Wave-Theory-Wave-Count-w-138-000-Target/”>shared By Alan Santana on TradingView, Elliot wave theory could point to the direction bitcoin price could take next. The theory, which consists of five waves, has so far completed three waves and the fourth wave is expected to occur soon.
Since the third wave is very bullish and the price has risen so quickly, the fourth wave is expected to be more bearish. As Santana explains, this fourth wave points towards an upcoming correction. They also reveal that his analysis included Elliot's Law of Alternation and, applying it to this scenario, the fourth wave is bearish, but would not go as low as the second wave.
<img decoding="async" class="aligncenter size-medium" src="https://technicalterrence.com/wp-content/uploads/2024/02/Elliot-Wave-Theory-Predicts-Bitcoin-Bottom-and-Top-Here-Are" alt="Tradingview.com bitcoin Price Chart” width=”3096″ height=”1778″ loading=”lazy”/>
Source: bitcoin-s-2024-Elliot-Wave-Theory-Wave-Count-w-138-000-Target/">TradingView.com
Once this fourth wave kicks in, the price of bitcoin is expected to see a sharp correction. However, at the lower end of this correction is the $31,800 level, the analyst believes. So in this scenario, there will be a return to $20,000 before bitcoin resumes its next bullish leg.
“This higher grade wave four cannot enter wave two territory, which puts the lowest possible price for the next correction at $31,805 according to Elliot wave theory,” Santana said. He further added that: “Just as wave three would lead to a correction (wave four), wave four invariably leads to another impulse; the last and fifth wave of the higher degree.”
bitcoin Hits High of $138,000
The Elliot wave theory not only points towards a possible bottom, but also gives insight into where bitcoin's top could be in the fifth wave. The crypto analyst uses one of two wave principle methods to forecast this price, which takes into account the peak of the third wave and then uses it to give the peak of the fifth wave.
So far, the local high of this third wave appears to be $52,985, where bitcoin peaked earlier this week. Since the wave principle says that the peak of wave 5 would be three times that of wave 3, the analyst multiplies $59,985 by 3, giving a cycle high of $138,714.
As for when this peak will occur, Santana explains that everything could happen in 2025, which is when the peak would occur. “Therefore, the potential for the final impulse or fifth wave, based on the Elliot wave theory system, amounts to $138,714. This may happen sometime in 2025,” said the analyst.
<img loading="lazy" decoding="async" class="aligncenter size-medium" src="https://www.tradingview.com/x/JHK2Lzhl/" alt="Tradingview.com bitcoin Price Chart” width=”3286″ height=”1530″/>
btc price at $51,700 | Source: BTCUSD on Tradingview.com
Featured image from Investopedia, chart from Tradingview.com
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