The continuous price correction of bitcoin (BTC) could continue according to a nearly century old technical analysis principle called Elliott Wave Theory.
The temporary bearish outlook put forth by Elliott Wave Theory came as Bitcoin fell below $35,000 at the height of the Russia-Ukraine conflict.
Bitcoin wave repeat fractal eyes
The theory, which divides the price cycle into two groups – one consisting of five upward impulses and the other of three consecutive corrective waves – suggests that the price of bitcoin will fall to $25,500 in 2022.
At the heart of his bearish outlook is his track record of predicting periodic highs and lows throughout the history of the bitcoin market, as shown in the chart below.
Weekly BTC/USD price chart using Elliott waves. Source: Trading View
The bitcoin chart shows three initial impulse waves (1, 3 and 5 in red) and corrective waves (2 and 4 in red). The fifth wave is still developing, confirming that BTC could exceed $100,000 in the future. But together, these five waves represent a bullish structure that is likely to unload in wave 5, followed by three corrective waves: A, B, and C.
In this case, each major wave, marked in red, consists of sub-waves, with five waves (impulses) moving in the direction of the trend with one major degree (from 1 to 5 in black), followed by a three-wave correction in the direction of the highest degree (from a to c). in blue).
Weekly Bitcoin/USD price chart with subwaves. Source: Trading View
Between 2012 and 2018, the price of bitcoin repeatedly increased between wave 1 and wave 5, followed by a correction from wave A to wave C. Each time, wave C is noted, which coincides with Bitcoin’s 200-week exponential moving average (50-week EMA ). ), the BTC price base and the completion of the so-called Elliott wave cycle, whether it be 2015 or 2018.
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After 2018, Bitcoin entered a new Elliott wave cycle. It has already gone through a five-wave advance — from nearly $3,200 in December 2018 to about $69,000 in November 2021 — and is now in the midst of a three-wave correction in anticipation of the formation of the final wave C.
A weekly BTC/USD price chart showing an ongoing Elliott wave cycle. Source: Trading View
Given that the next wave will appear around the 200-day exponential moving average, this could mean bitcoin hitting around $25,500.