Bitcoin Falls Flat: Examining A Rare Bull Market Corrective Pattern
06 Dezember 2021 - 10:46PM
NEWSBTC
Bitcoin price in a flash found itself below $50,000, only weeks
after the top cryptocurrency set a higher high. End of year price
targets for $100,000 or much higher are now no longer within
striking distance, thanks to a rare bull market corrective pattern
that few saw coming. But although Bitcoin has fallen “flat” on its
back, it could be the last time the cryptocurrency does so before
the conclusion of the bull market cycle. The Shocking Correction
Crypto Die-Hards Didn’t See Coming Ask most investors in Bitcoin
what their thesis is, and the majority would probably point to the
cryptocurrency’s scarce supply, the halving, or the stock-to-flow
model. The cyclical behavior related to the halving every four or
so years is all that’s ever existed historically and all the masses
have to go on. The stock-to-flow model takes scarcity and the
halving into consideration, to predict prices as high as $100,000
to $288,000 in December 2021. Instead, each coin trades today at
$49,000. Related Reading | Finding Fibonacci: Is Bitcoin Beginning
A “Golden” Recovery? Also throughout history, each time Bitcoin
price made a significant higher high, it continued in a parabolic
uptrend. This time, however, was different. The leading
cryptocurrency by market cap set a new high above and beyond its
April peak, but has since corrected back down by as much as 38%. So
what gives? Well, the first clue to the type of corrective pattern
Bitcoin is in, is related to that 38% drawdown. That’s because
38.2% is the 0.618 Fibonacci retracement level. With a 61.8% move
in mind, there is a likelihood that the corrective pattern in play
is called a “running flat.” Which type of "flat" is Bitcoin trading
in? | Source: BTCUSD on TradingView.com According to Elliott
Wave Theory, during bull markets, there are two major corrective
phases and three impulses up that make the primary uptrend. These
phases alternate not only between impulse and corrective, but the
strength of impulses and severity of corrections also alternate.
But we’ll return to the concept of alternation shortly. The market
had expected the fifth and final impulse up to $100,000 or more,
but a potential “flat” has prevented a wave 4 from concluding –
either up until now, or just yet. What isn’t entirely clear, is the
type of flat that Bitcoin is in. Next Phase Of Bitcoin Bull Market
Begins With Conclusion Of Flat Flats can be regular, irregular or
expanded, or in very rare cases, “running.” Running flats are so
rare, because they occur when higher timeframe uptrends are so
strong and dominant, the flat fails to terminate beyond the A wave
in the correction. The comparison above shows that Bitcoin price
action fits the Fibonacci relationship of the pattern flawlessly.
The higher high and B wave stopped out at around 123.6% of the wave
A down, then fell precisely to 61.8% of the B wave up to
potentially complete the C wave. The question is, does the collapse
finish here? Or does Bitcoin price continue down to form an
expanded flat instead? The 123.6% extension target of an expanded
flat would instead be closer to $19,500 – where BTC peaked back in
2017. Elliott Wave alternation guidelines explained | Source:
BTCUSD on TradingView.com But there is still plenty of hope left,
for bulls, according to Elliott Wave’s rules of alternation. A
primary motive wave alternates between impulse and corrective waves
in a five wave pattern. Even-numbered waves are always corrective,
with odd number waves moving with the primary trend. Related
Reading | Want To Learn Technical Analysis? Read The NewsBTC
Trading Course Even corrective waves alternate, in simplicity and
severity. One correction tends to be sideways, while the other is
sharp. It is difficult to imagine anything sharper than Black
Thursday of last year. Elliott Wave also specifies that one
correction is likely to be a simple ABC pattern, while the other is
much more complex. The complexity of the consolidation during 2019
versus 2021 is vastly different. There is also a clear wave one and
longer wave three that have formed a wedge-like pattern. If the
wedge pattern holds, an expanded flat will have been narrowly
avoided, and the fifth and final impulse wave should begin. Leading
into the fifth wave isn’t the happy ending bulls are hoping for,
however. The resulting pattern, according to the same Elliott Wave
Theory that suggests the uptrend is still in tact, could result in
the worst bear market ever once the uptrend has completed. I don't
think for a second we're bearish, however, when that time comes,
#Bitcoin is probably in for the worst bear market in its history.
pic.twitter.com/GkSWmkD83a — Tony "The Bull" Spilotro
(@tonyspilotroBTC) December 6, 2021 Follow @TonySpilotroBTC on
Twitter or join the TonyTradesBTC Telegram for exclusive daily
market insights and technical analysis education. Please note:
Content is educational and should not be considered
investment advice. Featured image from iStockPhoto, Charts from
TradingView.com
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