Bitcoin appears to be stuck in a consolidation area between $50,000 and $52,000, with neither bulls nor bears succeeding in completely seizing control of the trend. This performance has sparked much speculation as to whether the BTC price has finally found a local high. One of those who has speculated on price direction is cryptocurrency analyst Alan Santana. He used Elliot wave theory to predict where cryptocurrency prices would head next.
Elliot Wave points to a correction at $31,800.
In analysis shared by Alan Santana on TradingView, Elliot Wave theory may point to where the Bitcoin price will head next. The theory, which consists of five waves, has completed three waves so far, and the fourth wave is expected to occur soon.
Given that the third wave was very strong and prices rose so quickly, the fourth wave is expected to be even weaker. As Santana explains, this fourth wave points to a coming correction. They also show that their analysis includes Elliott’s Law of Alternation, and applying it to this scenario, the fourth wave will be bearish, but not as low as the second wave.
Source: TradingView.com
Once this fourth wave begins, the Bitcoin price is expected to see a sharp correction. However, the analyst believes that the low point of this correction is around $31,800. So, in this scenario, Bitcoin would return to $20,000 before resuming the next phase.
“This higher level of wave 4 cannot enter the territory of wave 2. This sets the lowest possible price for the upcoming correction at $31,805 based on Elliot wave theory,” Santana said. He also added: “Just as wave 3 leads to a correction (wave 4), wave 4 invariably leads to another impulse. This is the final and fifth wave at a higher level.”
Bitcoin peaks at $138,000
Elliott Wave Theory not only points to a possible bottom, but also gives an idea of where the Bitcoin high will be located in the fifth wave. Cryptocurrency analysts predict this price using one of two wave principle methods. This takes into account the peak of the third wave and then uses this to give the peak of the fifth wave.
So far, the local high for this third wave appears to be $52,985, the highest Bitcoin hit earlier this week. According to the wave principle, the peak of the fifth wave will be three times higher than the peak of the third wave, so the analyst would multiply $59,985 by 3, resulting in a cycle peak of $138,714.
As for when this peak will return, Santana explains that it could take place until 2025, when everything will peak. “Therefore, the potential for a final shock or fifth wave based on the Elliott Wave Theory system amounts to $138,714. This could happen sometime in 2025,” the analyst said.
BTC price at $51,700 | Source: BTCUSD on Tradingview.com
Featured image from Investopedia, chart from Tradingview.com
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