Bitcoin’s $10,000 “Line in the Sand”

Bitcoin’s $10,000 “Line in the Sand”
The cryptocurrency’s trends continue to be fueled by investor psychology

By Elliott Wave International

On January 23, Bitcoin fell below $10,000. That’s the second time in recent days that prices dipped below this psychologically important threshold. The headlines picked up on the drama:

“Bitcoin tumbles below $10,000 and is now down 25% on the year…” (CNBC, Jan 23)

That same article also observed:

“No specific driver was immediately apparent behind Tuesday’s decline…”

The driver was investor psychology. That’s something Elliott waves analysis is adept at helping you track and forecast, so let’s see what the waves had to say about Bitcoin’s latest slide.

The day before the drop, our Cryptocurrency Pro Service posted this chart and a bearish forecast (partial Elliott wave labels shown):

Bottom Line: Multiple [Elliott] wave counts warn XBT is headed lower.

(Last Price 10710): The decline below 11,040 signals that the recent correction is likely complete. There are two ways to count it. Wave iv might have ended… or we can count [a still-unfolding wave iv triangle]… Both [wave counts] warn the risk is to the downside…

Early the next day, Bitcoin fell to $9,910. Here’s what the price action has looked like since (partial Elliott wave labels shown):

Keep in mind that sideways market moves are almost always corrective. Meaning that, most likely, Bitcoin’s “wave iv” our January 22 analysis mentioned above is still developing — as an Elliott wave pattern called a “contracting triangle.”

If you know Elliott, you know exactly what this wave labeling implies.