Bitcoin Experiencing Textbook Elliott Decline

15. Juli 2022

So far, bitcoin has been forming a perfect zigzag corrective wave. It is remarkably beautiful. Truly, if I were to ever write a textbook on Elliott wave analysis, I would feel compelled to include a bitcoin chart as one of the defining models of the zigzag corrective pattern in the real world.

In order to make the pattern truly 100% textbook, bitcoin must still decline to approximately the $12,100 level (this is where wave A would equal wave C), although the $14,900 level would suffice (The 0.786 Fibonacci level).

It seems that the primary support preventing the completion of this magnificent wave is a trend line that started forming in 2015 on the logarithmic scale


But fear not. The current environment for bitcoin is relatively bearish:

• Bitcoin's correlation coefficient with the S&P 500 has averaged 0.70+ over the past few years. The current outlook for the S&P 500 isn't good.
  
• Over the past 11 years, bitcoin has had extremely bearish seasonality from mid-August to mid-October. If you bought bitcoin and sold bitcoin at these times over the past 11 years, you would have only made a profit for 4 of those years.
  
• It appears that bitcoin is currently developing a bearish flag pattern.
  
• Bitcoin is currently below its daily Ichimoku cloud, major moving averages, MACD, etc. From a trend-following perspective, there is no question about bitcoin's trend, at least on the daily timeframe.
  
• With so many in the cryptosphere having capitulated or on the brink of capitulation, the general optimism and overall euphoric mood that once attracted new participants has left the market. Many of the remaining participants are not willing to risk more of their money at this time, at least not in sufficient quantities to prop up prices.
  

As a result, I believe there is still potential for bitcoin to finish forming its textbook-worthy zigzag pattern.