Bitcoin (BTC) may rally another 50% before seeing a selloff to complete its bear market, new research predicts.
In the latest issue of its regular markets newsletter, “The Crypto Circular,” trading firm QCP Capital issued a grim warning to those who believe the bear market is over.
A study warns of the “final sale of wave 5”
Bitcoin has surprised by holding on to new, abruptly recovered support levels in its week-long bull run, hitting a high of $21,650 so far.
Despite widespread suspicion about the “choreographed” move, the BTC/USD pair has retraced key trend lines and psychological price points.
In the case of the QCP, there is still plenty of fuel for the pair to go higher, but that does not mean that the overall bear market is over.
Updating his long-term Elliott Wave price analysis, he argued that the current rally constitutes a Wave 4 for Bitcoin – essentially a bear market relief move.
“Make no mistake, what we are seeing now in risk markets is characteristic of wave 4,” he wrote.
“We stand by our view that this bounce from the November 2022 lows is only a wave 4 correction and we are left with a final wave 5 sell off.”
This final capitulation would be no joke; Wave 5, as an earlier chart from December showed, would mean that both Bitcoin and Ether (ETH) could drop below their 2022 bottom.
“The extension we are seeing so far in 2023 is well within wave 4 parameters, even if it has broken some short-term technical levels towards the top, thus adding to the bullish momentum,” the bulletin continues.
Elliott wave theory states that the 20%, 38.2%, and 50% Fibonacci retracement levels are of particular importance in wave 4. Since Bitcoin has already corrected almost 20% from the recent macro lows, there remain two price targets in play: $27,100 and $31,850.
“Technically until these levels are broken, wave 4 is still in play and a final wave 5 must not be ruled out for these markets that break the lows,” they point out from QCP.
“Without a doubt, the pain trade is lower right now.”
The WEF accompanies the unstable price of BTC
As Cointelegraph reported, Bitcoin has shifted from “up only” behavior to much-needed consolidation in recent days.
Contributing to this was panic sparked by the US takedown of cryptocurrency exchange Bitzlato, which came amid fresh regulatory concerns about Bitcoin from participants at the World Economic Forum, which is taking place in Davos, Switzerland.
The BTC/USD pair was trading around $20,800 at press time on Jan. 19, according to data from Cointelegraph Markets Pro and TradingView.
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