Geometric Thinking Update
By Jim Fredrickson
This blog is not really mine. It is Ross Ulbricht’s. He wrote an article detailing his BTC wave count. He outlines his primary, secondary and tertiary wave counts (all decent wave counters have at least 2 counts, since there is no way to know in advance if your primary count is correct.)
I have copied his text regarding his secondary count, since it is essentially the same as my primary count. The drawing above is his hand-drawn annotation of his BTC wave count. His entire blog can be found here.
That scenario is that the ~$20,000 peak was the end of intermediate wave (5) and thus waves ⑤ and I (see Fig. 2). Cycle wave I is the entire move up from Bitcoin’s beginning, so if that is over, it means the price action since then is part of cycle wave II which will correct everything we have seen so far in Bitcoin. It will be the largest correction to date and will likely be accompanied by extreme pessimism for Bitcoin’s future.
If that is the case, the move down to $3,200 from ~$20,000 is wave Ⓐ, the first of the three waves in wave II, while the move from ~$3,200 to above $13,000 is best counted as Ⓑ, though it may be a little early to count Ⓑ as finished. Both divided into three subwaves. This is allowed in Elliot Wave as part of a pattern called a “flat.” The next major move then would be wave Ⓒ down unless something more complex is unfolding, which can happen in big corrections.
Regardless, prices will very likely fall below $3,200 and there is no hard limit to how low they can go (except $0 of course). The Elliot Wave guideline puts the price target in the range of the previous fourth wave of one less degree (i.e wave ④ of I), which had a price range between ~$175 and ~$1,200. We can’t say for sure because we have never seen a cycle-degree correction in Bitcoin, but past primary degree corrections (waves ② and ④ of I) ended above or near the top of their guideline range. So maybe wave II will also and won’t fall below $1,500 or so.
Whether we are in it now (our second scenario), or there is one more stab into new highs with wave (5) (our first-scenario), wave II will come. As noted, it will likely be accompanied by extreme pessimism and antagonism toward Bitcoin. Long-time hodlers may capitulate and sell out. Businesses and governments may reject it. Some may call it “dead.” But so long as bitcoins are still being traded and the system remains technically sound, the end of wave II could be the best buying opportunity we will see for a very long time, perhaps ever again.
There is a third wave count that, while technically allowed, my gut tells me is not correct. This count puts the ~$20,000 peak as the end of wave I and the move down to ~$3,200 as the entirety of wave II. This wave II is puny and not commensurate with the spectacular drama of wave I. As amazing as the rise of wave I has been (Bitcoin’s history to date), I expect wave II to be equally shocking, though the negative emotions of fear, panic, pessimism and rejection will replace the euphoria and FOMO we have seen in wave I.
This is not financial advice, just words of wisdom from someone who has seen it all over the past few decades. Do with it what you will. Happy Trading!