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Bitcoin’s Elliott Wave Pattern: Believe What You SEE, Not Hear

“Fundamentals” in cryptos work far less than most people think

by Bob Stokes
Updated: February 22, 2023

As you may know, the Elliott Wave Principle is named after R.N. Elliott, an accomplished accountant who became seriously ill about ninety years ago and decided to use his time in the hospital to study the behavior of the stock market.

That's when he noted repetitive price patterns in stock market charts, which became the basis for the Elliott wave model.

If it were not for Hamilton Bolton, a pioneer in the studies of bank credit and its relationship to stock prices, Elliott's work might have been tucked away and forgotten. It's Bolton who kept Elliott's work alive after Elliott's death in 1947.

With that in mind, here's a quote from Frost & Prechter's Wall Street classic, Elliott Wave Principle: Key to Market Behavior:

Bolton used to say that one of the hardest things he had to learn was to believe what he saw. If you do not believe what you see, you are likely to read into your analysis what you think should be there for some other reason.

For example, if the whole world believes a financial market is going down (or up), but the Elliott Wave Principle indicates a pending move in the opposite direction -- a practitioner of the Wave Principle should stick to his guns -- at least until a possible shift in the pattern suggests a change in stance.

I say all that to say this: Just like you and other crypto market observers, our senior crypto analyst Tony Carrion also had heard all the "fundamental" reasons to be bearish on Bitcoin during the past some months. Failures of crypto exchanges were hitting the headlines left and right, including FTX. All the while, Bitcoin had fallen a long way from its all-time high of nearly $69,000 in November 2021 and hit a low of about $15,400 with just weeks remaining in 2022.

At this juncture, it was hardly surprising that many observers feared the price would drop further. Here's a Nov. 29 Yahoo! Money headline:

Could Bitcoin Crash to $10,000? Market Experts Weigh In

Yet, at the time, Bitcoin's Elliott wave price pattern indicated that the next significant move would be up. Tony "believed what he saw" -- referencing that Elliott Wave Principle quote.

On Dec. 2, just a few days after that bearish headline published, Tony said this in our December Global Market Perspective:

Bullish reversal underway.

Tony reiterated his bullish stance in our February Global Market Perspective, which published Feb. 3, by saying:

Bitcoin -- looking higher...

Bitcoin has recently traded near $25,000 -- a substantial upward price move since the publication of our February Global Market Perspective, not to mention our December Global Market Perspective.

The bottom line is that, in Elliott Wave International's view, it's best to review Bitcoin's Elliott wave pattern as opposed to "fundamentals."

Even a major financial website acknowledged in its own way the disconnect between Bitcoin and fundamentals on Feb. 16 (CNBC):

Bitcoin rises despite U.S. crackdown, as crypto market gains $84 billion in value [emphasis added]

"Despite" is that word you hear a lot when a market defies "fundamentals."

Of course, Elliott wave analysis, like any serious form of market forecasting, offers no guarantees, but it follows patterns of market psychology, the true driver of trends.

Learn what Elliott wave analysis suggests is next for Bitcoin by following the link below.

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Along with opportunities, our Global Market Perspective also sheds light on major risks in the economies and markets we cover.

If you choose to review our Global Market Perspective, you'll get forecasts for U.S., Asian-Pacific and European stocks and economies, global currencies, cryptocurrencies (including Bitcoin), crude oil, natural gas, metals (including gold and silver), bonds and more.

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