BTCUSD: Bitcoin’s All-Time Elliott Wave Structure

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2024-02-01. BTCUSD—Bitcoin’s All-Time Elliott Wave Structure

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This Elliott wave assignment conforms to Elliott’s rules for wave construction. This includes the permissible size relationships between the motive components (waves 1, 3, 5) of each impulse wave. I believe this is the only assignment that conforms to all rules.

The most critical rule to permit the assignment is that the third wave of an impulse cannot be the shortest wave among waves one, three, and five. Wave sizes were measured with the logarithmic Fibonacci extension tool.

The wave degrees are assigned on the assumption that the genesis wave one is of Cycle degree, marked in purple in capital Roman I. Thus, the chart comprises a depth of waves of degrees Cycle, Primary, and Intermediate degrees, as indicated.

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While the assignment of Cycle wave I as the genesis wave of the chart may seem rather intuitive to most analysts, casual users of the Elliott Wave Principle may wonder about the placement of Cycle wave III at the top of the 2021 bull market.

Of course, the third wave of Cycle degree must consist of a five-wave 1-2-3-4-5 structure in Primary degree. This means, there must be two peaks between peaks I and III. In addition, wave III should be larger than wave I, when measured in percentage of change from beginning to end. On the semi-log chart that means the vertical distance between II and III is larger than 0 to I, where zero denotes the origin of wave I. The 100% distance of wave I is marked on the chart above the end of wave II, by the dotted horizontal line. We can see that the placement of wave III just barely fulfills that relationship, by the extend of the monthly candle bar wick. This assures that now wave V can grow to any size in the future without violating the rule that wave III must not be the shortest of I, III, and V.

Furthermore, we can see that this relationship now also holds true for the Primary waves ((1)), ((3)), and ((5)), which are the circled numbers in the chart. Wave ((3)) is shorter than wave ((1)), but it is longer than wave ((5)). If the bull market of 2021 had gone higher beyond some margin above 69000, and wave ((5)) end were higher, or we made a different assignment, this rule would have been broken, and the assignment would be invalid.

This last observation also prohibits us from assigning an unorthodox top to the 2021 peak, as some analysts try, which means assigning the peak as wave B of an expanded flat, and declaring the bottom of November 2022 as Primary wave ((4)), so that the current rally would be wave ((5)). The current rally will bring a new ATH, driven by a supply shock from the halving when miners get their reward cut in half, which limits the BTC supply they can sell into the markets. So it cannot be the fifth Primary wave.

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The current market rally of 2023 through 2025 or 26, likely, must be in fact the beginning of Cycle wave V, currently executing in Intermediate wave (3) of Primary wave ((1)).

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Given these circumstances and explanations I consider this wave assignment as definitive❣️

Perhaps future price development provides additional possibilities of interpretation, but I find this unlikely for several years to come.