Following our analysis from December 22, 2024, our assumption that Bitcoin might enter a corrective phase has materialized. At that time, we outlined two potential scenarios:
- Scenario 1: Larger Wave 4 Correction (Black Path)
- Wave A: The initial corrective phase unfolded, pushing Bitcoin lower from its local highs.
- Wave B: A relief rally was anticipated, retracing to critical Fibonacci levels (0.618 or 0.786), corresponding to $102,151 and $104,981 respectively.
- Wave C: A final, aggressive downward leg was expected to complete the Wave 4 correction and prepare the market for the final impulsive Wave 5.
- Scenario 2: Flat Correction with Immediate Continuation (Blue Path)
This scenario assumed the correction had already been completed, allowing for a direct resumption of the upward trajectory without extended consolidation.
Current Situation
Now, weeks later, the price action supports Scenario 1 as the most likely outcome. We believe the market remains in the corrective phase, and we favor the hypothesis that Bitcoin may briefly break down from the current channel and sweep the lows. Our expectation is for Bitcoin to find support in the $87k-$85k range, aligning with Fibonacci retracement levels and prior structural supports.
Detailed Observations
- Wave Structure & Fibonacci Levels
- The ongoing correction aligns well with the Elliott Wave framework, where the current Wave C appears to be incomplete.
- Fibonacci retracement levels at 0.382 ($82,261) and 0.5 ($75,532) are critical zones of interest if the $85k level does not hold. These levels are likely to serve as key areas for potential bounces or liquidity grabs.
- Channel Dynamics
- A short-term breakdown of the ascending trend channel appears probable, creating temporary bearish sentiment.
- However, we anticipate this to be a false bearish signal, as the broader market structure indicates we are approaching the final stages of this correction.
- Timing Perspective
- This corrective phase has lasted for an extended period, suggesting that a resolution is imminent.
- Historically, corrections of this nature often conclude with a sharp move, either flushing late longs or trapping overzealous shorts, before reversing.
- RSI Analysis
- The daily RSI remains in a neutral zone, leaving room for additional downside.
- As price approaches the critical support zones, we expect bullish divergences to emerge, signaling the beginning of the next impulsive wave.
Projection: The Final Bullish Wave
Once the correction concludes, we anticipate Bitcoin will resume its upward momentum, entering the final impulsive Wave 5 of this macro cycle. Our long-term target remains around the 0.618 Fibonacci extension ($140k), though higher targets may emerge depending on the market’s momentum.
Key Points to Monitor
- Break of Support at $87k-$85k:
- A clear breakdown below this range could lead to a liquidity sweep, targeting the $82k (0.382) or $75k (0.5) levels.
- However, we view these zones as potential springboards for a bullish reversal.
- Signs of Accumulation:
- Bullish divergences on lower timeframes (e.g., 4H or daily RSI) and a failure to sustain the breakdown would confirm the end of the correction.
- Bullish Reversal Signals:
- A breakout above $102k (previous highs) would confirm the resumption of the uptrend, invalidating any deeper correction scenarios.
Conclusion
From our perspective, this correction is nearing its completion. The extended duration and alignment with key technical levels strongly suggest we are in the late stages of this Wave 4 correction. While the short-term outlook may involve some downside toward the $87k-$85k zone, we remain confident that the bullish reversal is imminent.
Bitcoin appears well-positioned for a parabolic rise in Wave 5, targeting levels around $140k. As always, these scenarios are probabilistic, not guarantees, and the market will confirm the path in the coming weeks.