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Currencies , Investing , Trading

Bitcoin: How the Elliott Wave Model Anticipated the Rebound

Is the cryptocurrency headed back to $65,000 – or even higher?

by Bob Stokes
Updated: August 12, 2021

Bitcoin appeared to be "down for the count" as the cryptocurrency dropped from its mid-April all-time high near $65,000 to below $30,000 in June.

Indeed, here's a July 1 CNBC headline:

Most investors see bitcoin ending the year below $30,000, CNBC survey shows

So, clearly, the prevailing sentiment toward bitcoin was highly bearish.

Yet, the basic 5-3 pattern of the Elliott wave model indicated that a turn up was just ahead. In case you're unfamiliar with the Elliott wave model, the basic pattern is five waves in the direction of the main trend followed by three corrective waves.

EWI's head crypto analyst Tony Carrion used that knowledge in our July 2 Global Market Perspective when he made this statement:

Our preferred count has been to consider the price action since the December 2018 low to be the subwaves of a [sizeable Elliott wave] advance.

Bitcoin [is] at or near the end of [an Elliott wave] correction.

In other words, Tony was anticipating a rebound in bitcoin's price, even as the majority of investors were bearish.

Bitcoin continued to trade in a fairly tight range for a time thereafter, but well before the end of July, the price began to advance.

By August 9, bitcoin had climbed above $46,000 -- its highest level since mid-May.

Interestingly, on that very day, another CNBC headline said:

Fundstrat says bitcoin is headed to $100,000 by year-end as a trading rule kicks in

Quite a contrast in sentiment from that July 1 headline mentioned a moment ago.

Getting back to bitcoin's price action, the digital currency traded in the red on August 10, yet, as of this writing on August 11, bitcoin is back above $46,000.

The question now is: how far up is bitcoin likely to climb, according to the Elliott wave model?

You can get insights in our recently published August Global Market Perspective.

This publication also provides analysis of other cryptocurrencies, as well as global stocks, bonds, metals, forex, energy and more -- all in all, more than 50 worldwide financial markets.

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