Bitcoin price is currently holding above the $20,000 resistance level. This band is also now the light at the end of the tunnel for many traders, following Bitcoin even looked below the $16,000 level during the long dark months of the crypto winter. According to a new forecast, BTCUSD’s next target might also reach a level that very few would think or expect at this point. However, Elliott Wave Theory, a nearly century-old mathematical model, may suggest that the next cycle may peak much sooner than many think – at $161,800.
Finding Price Targets with the Mysterious Power of Fibonacci
Cryptocurrency traders usually use Fibonacci retracements and extensions to make decisions regarding where and when to buy or sell. It is not known why exchange rates also tend to gravitate to these levels, but these ratios are also often found in nature.
For example, Venus orbits the Sun in 224.6 days, while Earth orbits in 365.2 days. This creates a ratio of 8/13 – both Fibonacci numbers – which is roughly 0.618. That is why the golden ratio is also called the divine ratio or the golden ratio. It’s almost magical.
Fib ratios are derived from the Fibonacci sequence – a sequence of numbers where the next number in the sequence is the sum of the previous two numbers. The sequence is 0, 1, 1, 1, 2, 3, 5, 8, 13, 21, and so on.
Although this notable sequence is named following the famous Italian mathematician who popularized it, its use dates back to Indian mathematics around 200 BC. Simply put, it is the most ancient theorem possible in mathematics.
Investigating market cycles with Elliott wave theory
It was developed by Ralph Nelson Elliott in the 1930s Elliott wave theory. Now, this nearly hundred-year-old study may be the key to figuring out what’s going on with Bitcoin.
According to Elliott wave theory, market cycles move in five primary waves, with the first, third and fifth waves moving with the trend, and the second and fourth waves moving once morest the trend as correction phases.
Connections with the Fibonacci number sequence appear everywhere in Elliot wave theory. Impulse waves to the upside usually peter out at Fib extensions, while corrections end at Fibonacci hold levels.
A five-wave motif wave completes a cycle in five independent waves, with three impulses and two corrections. A complete Elliott wave sequence consists of 21 moves and a total of 21 correction patterns associated with it. Every single number is a Fibonacci number.
As a speculative asset, Bitcoin is particularly susceptible to price movements driven by emotion. Thus, it also responds particularly well to Fibonacci numbers and Elliott wave theory.
Using the BTC CME Futures chart, you can also calculate an ongoing Elliott wave motif wave for Bitcoin. If the wave count is accurate, a Fibonacci extension target can be used to predict the possible end of the motif wave and bull cycle.
The price of Bitcoin may reach the Fibonacci extension of 1.618, which is roughly $161,800 per coin. Interestingly, if we multiply $100,000 by the golden ratio, we still get $161,800. The leading cryptocurrency reached the golden ratio target at the 2021 peak when Fibonacci extensions are drawn from the most open point on BTC’s CME chart to the bottom of the 2018 bear market.
The target value depends on whether the Bitcoin price has completed the extended flat correction of the fourth wave and started the impulse of the fifth wave. While wave fives are usually the same as wave one in magnitude and strength, they can also mimic wave three, which is usually the longest and strongest.
The search for cyclic confirmation in crypto
In the video above, Tony “The Bull” walks through each wave count for Bitcoin step by step. With textbook Elliott Wave examples, he explains how the exchange rate can develop.
In this in-depth analysis, each wave ends at a key Fibonacci level dating back to the start of the Bitcoin bear market. By using the channeling technique to predict the next cycle peak, it is possible to achieve the bold goal in the next six months to a year.
Finally, the cyclical nature of BTC may be further strengthened by the Hurst cycle theory, which points to a near-perfect cyclical rhythm bottom since 2015. Every major low was also within a logarithmic buy zone, and every cyclical high was within its own sell zone.
The Fisher transformation then serves to possibly confirm the presence of another major turning point for BTCUSD – and perhaps its last bull market impulse before the cycle ends.
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