If you have followed us since December 2018, then you know we were expecting a major bottom in the cryptocurrency market, and expecting 2019 to be very bullish. In February we wrote an article suggesting an imminent wave two bottom, which proved correct, holding support by $10 on some exchanges.
We suggested then that a third wave would commence, thrusting Bitcoin prices much higher. The only part we got wrong was that our targets were exceeded in the third wave. That happens in strong bull markets. So in May we updated our target for Bitcoin to exceed $10,000 before it completed this rally. But we were 100% right about a bullish 2019 so far.
Now that we are over $10,000 we must provide readers a warning. We have five waves complete off our December low, so a correction should start imminently. While it is still possible Bitcoin can push up as high as $13,000, a correction is overdue. Few are bearish, and suggestions that this parabolic rise have just begun to fill the news.
So, are you ready for $0 Bitcoin? Well, isnít that what we were hearing from so many back at the end of 2018? And isnít it amazing that when the calls for Bitcoin blowing up get the loudest, the market finds a bottom? That is just the way markets work. When sentiment becomes too bearish, then there is not likely much downside left, and the market often finds a bottom.
As Alan Greenspan once noted:
It's only when the markets are perceived to have exhausted themselves on the downside that they turn.
But the bears will be given a second chance now. Once this five-wave rally finally completes, we will see a retracement of this rally in a second-wave pullback. This is how it is described in The Elliott Wave Principle:
Second waves often retrace so much of wave one that most of the profits gained up to that time are eroded away by the time it ends. . . At this point, investors are thoroughly convinced that the bear market is back to stay.
So it is likely that those bearish on Bitcoin will tell us once again that Bitcoin is worthless, as it is backed by nothing. They will also remind us that it is the investment fad of millenials and that it will soon fade. Or they will simply call it a scam once again. But we will likely see them reappearing over the next few months.
We donít know how long this wave two will last. With wave one off the December low now six months into its rise, we could see wave two take anywhere from three to six months. However, we have support currently at roughly $4,300 and we can fine-tune our support once we confirm a top has been struck.
Our assumption is that Bitcoin will hold the support we identify and set us up for the next major rally in the complex. And, yes, we believe that next rally will take us to our ideal target in the $65,000 region. However, based upon the size of this rally off the December lows, I cannot rule out the potential that Bitcoin can extend as high as $100,000 over the coming several years.
So, are you ready for a correction in Bitcoin? Are you ready for renewed calls for $0 Bitcoin across social media? Will you hang on through this wave two, or run for the hills? With Elliott Wave as our guide we are preparing for the next great rally for the crypto market as we look towards 2020-2021.