Bitcoin appears to be stuck in a consolidation zone between $50,000 and $52,000, with neither the bulls nor bears managing to fully control the trend. This performance has sparked some speculation as to whether the BTC price has finally found a local top. One of those who have speculated on the price direction is crypto analyst Alan Santana, who has used the Elliot Wave Theory to predict where the cryptocurrency’s price could go.
Elliot Wave points to a correction of $31,800
In the analysis shared by Alan Santana on TradingView, the Elliot Wave theory could point to the direction the Bitcoin price could go next. The theory, which consists of five waves, has completed three waves so far, with the fourth wave expected to happen soon.
Considering that the third wave is very bullish and the price has risen so quickly, the fourth wave is expected to be more bearish. As Santana explains, this fourth wave signals a coming correction. They also reveal that their analysis included Elliot’s Law of Alternation, and if they apply it to this scenario, the fourth wave is bearish, but would not go as low as the second wave.
Source: TradingView.com
Once this fourth wave comes into action, Bitcoin price is expected to undergo a sharp correction. However, at the bottom of this correction is the $31,800 level, the analyst believes. So in this scenario there will be a return to $20,000 before Bitcoin resumes its next rise.
“This higher degree wave four cannot enter wave two territory, leaving the lowest possible price for the upcoming correction at $31,805 based on the Elliot Wave Theory,” Santana said. He further added: “Just as wave three would lead to a correction (wave four), wave four invariably leads to a new impetus; the last and fifth wave of the higher degree.”
Bitcoin tops at $138,000
The Elliot Wave theory not only points towards a possible bottom, but also gives an idea of where the Bitcoin top could be in the fifth wave. The crypto analyst uses one of two Wave Principle methods to predict this price, which takes into account the peak of the third wave and then uses that to give the peak of the fifth wave.
So far, the local top of this third wave appears to be $52,985, where Bitcoin peaked earlier this week. Since the Wave Principle says that the peak of Wave 5 would be three times higher than that of Wave 3, the analyst multiplies $59,985 by 3, giving a cycle top of $138,714.
As for when this peak will occur, Santana explains that it could all happen in 2025, which is when the peak would occur. “So the potential for the final impulse or fifth wave, based on the Elliot Wave Theory system, is $138,714. This could happen sometime in 2025,” the analyst said.
BTC price at $51,700 | Source: BTCUSD on Tradingview.com
Featured image from Investopedia, chart from Tradingview.com
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