With all the chaos that happened in the cryptomarket this past week, there are speculations whether or not Bitcoin could still make a comeback from its latest massive dip. While investors and traders look for market analysis and explanations, a very important chart analysis has been overlooked. This chart analysis offers a very interesting insight on what is happening right now.
This past week has been quite a scare for the Bitcoin market and the cryptocurrency market as a whole. Majority of the coins in the market took a sharp dive with Bitcoin dipping as low as $10,000 in some exchanges. Following Bitcoin’s downward movement, the top 68 coins based on market capitalization also took a hit. Ethereum dived by almost 17%, Ripple took a 24% decrease, Cardano dipped by 23%, and some coins even down by around 15 to 40 percent.
With bloodbath in the cryptomarket, most investors and traders have opted out of the chaos and pulled out their investment. This is proven by the massive decrease of global market cap dropping to the $400 billion level from the $700 billion level.
FUD and Speculations
While FUD ensued (fear, uncertainty, and doubt), traders scour the news for any positive signs of market recovery. Some analysts attribute the massive decline to the fact that the upcoming Lunar New Year is a major Asian festivity, which makes the month of January the cash-out time for Asian investors. Although this is still speculative, historical data of past years indicate that January has always seen major market corrections. Looking closer at the Bitcoin price chart reveals some interesting findings.
The Elliott Wave Theory
Basically, the Elliott Wave Theory suggests that markets (including the cryptomarket) tend to move in the direction of the major upward trend in five waves, followed by a three-wave downward correction.
Taking a look at the Bitcoin price chart, it appears that Bitcoin has already reached the fifth wave of upward trending. This happened during the month of December when Bitcoin hit the $20,000 mark. Immediately after hitting the all-time-high mark, Bitcoin plummeted, which signals the first downward wave correction. Bitcoin managed to consolidate at around the $10,000 level, and pushed upward again to around the $17,000 level, which marks it second wave correction. After trading sideward during the early weeks of January at the $14,000 – $15,000 levels, the Bitcoin price took a massive dive to as low as the $9,000 mark, which signals the third wave of downward correction.
As of the time of writing, Bitcoin is currently trading at the $10,000 level, which may mean that the Bitcoin price is currently consolidating, with support at the $11,000 mark and resistance at the $12,500 mark. If the Bitcoin price movements follow the Elliott Wave Theory, we may see another upward rally in the coming weeks.