Bitcoin Elliot Wave Analysis- Further Decline to $86,000 is Likely

BTC Elliot Wave Analysis

The daily Bitcoin chart illustrates a complete five-wave structure within an Elliott Wave count, with Wave 3, a higher-degree wave, peaking at $108,360 on December 17. This peak has led to a corrective phase in Wave 4.

Before reaching the all-time high, the price action formed a rising wedge signaling diminishing momentum. This pattern usually indicates the completion of an uptrend, and we saw a lower-degree five-wave impulse being completed. A sharp decline followed to a low of $92,000 on December 20 – a 15% decline.

Such retracements are typical within the Elliott Wave theory and reflect the market taking a breather before resuming its primary trend. Following the Wave 4 correction, the price is expected to embark on a Wave 5 impulse that could propel Bitcoin toward $120,000 or even higher.

The daily chart’s Relative Strength Index (RSI) shows a bearish divergence, suggesting that the bullish momentum is waning. This aligns with the corrective phase currently unfolding. Bitcoin’s price is currently consolidating near the 0.236 Fibonacci retracement level, around $93,756.

This level may act as a potential support zone for the price to stabilize. However, should the correction deepen, the 0.382 ($86,129) and 0.5 ($79,965) Fibonacci levels present stronger areas of support, aligning with typical retracement behaviors in Elliott Wave theory.

These levels are crucial, as they often signal a turning point in the market. Once the correction concludes, buyers may step in, initiating Wave 5’s upward trajectory. The final wave in an Elliott Wave cycle often represents significant market optimism, and in this case, it could push Bitcoin to new highs.

Key Observations:

• Wave 3 has peaked with clear RSI divergence, indicating diminishing bullish momentum.
• The 0.236 Fibonacci level at $93,756 serves as the first support zone.
• Wave 5 could drive the price toward $120,000 or higher.

BTC Price Prediction

Zooming into the hourly BTC chart, Wave 3’s peak transitioned into a Wave 4 correction, unfolding in an ABC pattern. This classic corrective structure is characterized by an initial sharp decline (Wave A), a partial recovery (Wave B), and a final downward movement (Wave C). The lower high formed in Wave B, paired with declining momentum, suggests that Wave C could drive prices further downward before a bullish reversal sets in.

Key Fibonacci retracement levels highlight potential areas where the Wave 4 correction could be completed. While $93,756 (0.236) offers an initial support level, a more robust base may form near $86,129 (0.382). These levels align with historical support zones and are critical for market participants to watch.

Interestingly, the rising wedge pattern developing during the Wave 4 correction supports the idea of a prolonged downside move. However, once the wedge resolves, a sharp reversal could initiate the anticipated Wave 5. This final impulsive wave may coincide with a breakout above $96,000–$98,000, a key resistance range for Wave B.

Key Levels To Watch:

• Wave 4 correction progresses in a textbook ABC structure.
• Support zones: $93,756 (0.236 Fibonacci), $86,129 (0.382), and $79,965 (0.5 Fibonacci).
• Resistance lies between $96,000 and $98,000 for Wave B.
• Completion of Wave C could trigger a powerful bullish impulse for Wave 5.
• Traders should monitor RSI and Fibonacci levels for entry opportunities.

In summary, Bitcoin’s current retracement is a natural part of its bullish cycle. The key for traders and investors is to identify the Wave 4 conclusion, which will likely present a significant buying opportunity as the market transitions into Wave 5, potentially marking the next major leg up in Bitcoin’s journey.