Bitcoin: Deviation on the Path of the Moon (Cryptocurrency: BTC-USD)

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Produced by Jason Appel along with Avi Gilburt and Ryan Wilday

Since September of last year, the Bitcoin technical updates we have provided have focused on several iterations on the expected “road to $100k+”.

Before providing further comments, I should note that I stand by my prediction for new all-time highs and the price to rise north of $100K. A longer bearish cryptocurrency market is a possibility, but the technical structure indicates that the price is much closer to a significant bottom than a lasting top. There is no convincing evidence in the stock since the April or November 2021 highs to indicate that Bitcoin is in anything worse than bull market consolidation.

The fourth quarter of 2021 provided Bitcoin holders, particularly those with shorter time horizons, a lot of disappointment. After the initial “$100k” article in September, Bitcoin: Do We Have Liftoff To $100k?, the price formed a short bottom and rallied to new all-time highs following our expectations. Sadly, this breakout was not sustained, and the big disappointment came from the aftermath of the failed breakout in November, with prices retreating near the lows of summer 2021.

Since November of that year, sentiments have plummeted and fear has mounted amid bearish predictions and wild speculation about what potential regulatory actions might be and how they might negatively affect Bitcoin.

Last week, President Biden signed a long-awaited executive order on cryptocurrencies, “Executive Order to Ensure Responsible Development of Digital Assets.” And while we saw some intraday volatility, this order did not trigger any bigger sells.

The next regulatory issue (which is coming as I write this article on the evening of 03/13) is the EU Parliament vote on 03/14 on “Markets in Crypto Assets” (MICA). The effects this vote could have on price are beyond the scope of our technical work on Crypto Waves, but it is worth mentioning that previous regulatory measures aimed at Bitcoin over the years have failed to reduce price or demand in a lasting way. .

Where are we now?

While previous interpretations favored a bottom in place for wave 4, the latest move below the September 2021 lows provides strong evidence for the flatten correction of the broader wave 4 from the April 2021 high. Referencing the December article , Bitcoin: Detour On The Moonpath, conditions have been set for the various scenarios, and unfortunately for Bitcoin bulls, the market appears to be on the most detoured path:

“[Breaking $39.6k]… opens the door for price testing and/or breaking summer lows to finally test the $24K region we were looking for in July.”

Below is the chart accompanying the December article for visual reference; price is following the red path.

Following the December Update Bitcoin Chart

Jason Appel (Crypto Waves)

Thus, the preferred interpretation here is that the price is completing a nearly year-long bull market consolidation, after which the trend should resume.

Bitcoin micro (enlarged)

Jason Appel (Crypto Waves)

In the very short term (see the BTCUSD 8h chart (above), BTC has yet to reach its biggest wave 4 target support between $24K and Summer 2021 lows (approximately $28.8K), nor has it advanced both the January 2022 lows to suggest a bottom in place. As such, further near-term weakness is reasonably likely. Reasonably considering a low for such a pullback in hindsight would require a resounding, sustained break above $45,250.

Aside from those who trade Bitcoin on the day, any further drop to $24K could be seen as an opportunity for continued accumulation and dollar cost averaging at lower prices. Don’t discount the prospects of seeing Bitcoin north of $100K in 2022. It’s exactly from these kinds of sentiment conditions that we’ve seen previous major rallies.

“What if $24k isn’t worth it?”

While this is not expected, it has become important to provide coverage from this perspective, given Bitcoin’s deviation to the less bullish from our previous expectations.

First, a break below $24K does not in itself constitute an invalidation of the primary Elliott Wave pattern that is priced near the bottom on wave 4 of (3). A brief spike of $24K would not compromise the larger pattern as long as the price bounces back quickly and resoundingly. However, a sustained break below $24K has strong ramifications for longer-term forecasts. Such an outlook would “lower” our expectations for a final diagonal pattern originating from the December 2018 lows.

Target support in this case becomes the $11K to $17K region. Objectively, we could no longer consider this dip to be a 4th wave in an impulsive move from the 2020 lows. But as can be seen in the accompanying enlarged chart, Bitcoin has only 3 waves above 2018 and thus one more rally. is strongly expected to complete 5 waves. On this forward-looking diagonal, $11,300 is a significant support on the 61.8% log-scale retracement of the entire rally since the 2020 low. reasonable high, pending a reset to $3,000. This path is displayed in purple labels on the chart and, as can be seen, still portends a high of $100K. However, if the price goes the purple path, it is suggestive of a prolonged bear market after the next big rally.

The conclusion here – amidst the various paths presented – is that while the short-term bearish action outlook remains reasonably likely, continued pullbacks are providing opportunity for cheaper accumulation towards the next high. My current rating remains “Buy”, but below $30K I consider Bitcoin a “Strong Buy”.

Bitcoin daily chart (zoomed out)

Jason Appel (Crypto Waves)

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