BTC: Billion-dollar path to catastrophe? Revised Elliott count
This is an update on and supersedes my last chart (linked below).
That last chart is wrong. Forget it. The Elliott wave count is wrong.
So what's different here?
Well, to be honest, a YouTube video on an Elliott wave count that made Elliot wave theory seem like the invention of cretins got under my skin, but did make a decent point. Elliott wave theory depends on a full price history. So the video got me thinking about the origin point of the Bitcoin price chart. I was using the Bitstamp chart in my last post, and I'm aware, of course, of the BLX ticker. But I didn't think that the difference between zero and $2.21 for Bitcoin would be as significant as in fact it is.
Sobering oversight on my part.
I looked again at the BLX, at the origin moment, when the chart starts. The BLX starts 18 July 2010. The Bitstamp chart starts 17 August 2011. As it turns out, those missing 13 months do in fact change the entire Bitcoin chart, and the Elliott wave count. And quite dramatically.
EXPLANATION & METHOD:
1) Attached here is a snapshot of those missing 13 months. Anyone casually familiar with Elliott wave theory should see immediately why this period is important, and why it does, in fact, change everything. There is a clear five-wave structure here. And the percentage gain in those 13 months was 830,000%. I had at the origin of my last chart a move in my wave count from 1 into 2. But I didn't think it would be so momentous as it is.
2) The next part is a bit technical. Basically, I took the bars from the BLX chart and went through a process of fitting them exactly into the Bitstamp chart, matching the dates by using bars and measured date ranges, because we're dealing with a time period which isn't on the Bitstamp chart at all. I then double-checked the exact value of key levels in my subsequent Elliott wave count against historical daily price data on Bitcoin on www.statmuse.com/. This was important, in order to accurately cross-check the wave structure against Elliott wave Fibonacci guidelines and have an accurate basis on which to then project subsequent waves and extensions - indeed the whole of the rest of the chart. Of particular importance was the 1 and 2 marked in green, which I'm taking as Primary 1 and Primary 2 in Bitcoin's accurate wave count.
3) Previously, I was using a Schiff pitchfork off the 2013 bull run peak and the subsequent low of the 2015 bear market, which I was taking as a potential Primary 1-2 pivot. It contained price action reasonably well, though I was never particularly happy about not being able to get an Original settings pitchfork on the Bitcoin chart. I still can't, because of the enormous price skew of 830,000%.
With the new bar patterns on the Bitstamp chart, I looked for a pitchfork that would make sense of price action. At first I turned on my old pitchfork and played with the origin line, to try to get price action to fit. To be sure, the best alignment I could get found some interesting interactions with the Schiff origin lines. Getting the old pitchfork to fit price action gave me, by hazard, an origin point in time, which I was curious to calculate. 23 March 2008. I have no idea if that date has any significance in the prehistory of Bitcoin. But given the actual reality that Elliott wave is almost metaphysical, as an indicator of sentiment, it wouldn't surprise me if something did that happen on that day or near to it that perhaps helped spur the creation of Bitcoin. But that's conjecture.
5) I used the same origin point in time, and resting on $0.00, because Bitcoin was created from zero, and adjusted a pitchfork to the precise data points I had cross-checked on statmuse.com for my new Primary 1-2 pivot. The result contains price action very meaningfully. Much more so, I would say, than the old pitchfork. This is also a clue to the wave degree in play across the whole of Bitcoin's price history.
6) From here, I worked on the Elliott wave count, checking major pivots against Elliott wave guidelines as follows:
Wave 2: 50%, 61.8%, 78.8% or 88.7% of wave 1
Wave 3: 168.8%, 175%, 227.7% or 361.8% of wave 1
Wave 4: 23.6%, 38.8%, 50% or 61.8% of wave 3
Wave 5: Inverse 123.6% - 161.8% retracement of wave 4; equal to wave 1; 61.8% of wave 1-3
It was the failure of price action after 2013 to meet these targets that got me thinking about the broader Bitcoin count and led to my last chart. In this new chart, I believe the count is more accurate, at the big picture level, but we still don't have waves that - yet - have met those guidelines off the initial Primary 1-2 pivot.
7) What does this mean?
a) For Elliotticians, the Bitcoin wave count is downgraded significantly. In my view, we have a Primary 1 and Primary 2, but everything else subsequent is at a lower wave degree.
b) The Primary 1-2 pivot in this new count obliges us to look again at all subsequent waves, and in particular take note of their Fibonacci relationships. Extremely obvious is that we have had a series of wave 2s, in subdivisions below Primary wave degree. This is what has been giving Bitcoin its dramatic peak and crash price history. In my view, that is now in the past. We are completing a wave 3 at Minor degree. Ahead are two major wave 4s, as the subdivisions of the Primary degree play out. What this means is that coming corrections are likely to be far more shallow than past "bear markets".
c) The next projected "bear market", depending on where the current Minor 3 within Primary 3 lands, may not break below $100k. The history of BTC losing 94%, 87%, 85% and 93% was the result, in each case, of a wave 2 correction.
d) BTC will pass $1m before even reaching its Primary 3 peak. By the time BTC puts in Primary 5, and completes one Cycle degree, 1 BTC is projected to be worth $1.27 billion.
8) Yes. But wait. As I said when looking at future targets in my last post, we don't know what a dollar will be worth in 2030-31, which is the time period I'm looking at for BTC to complete Cycle 1. My last post was about Fibonacci spirals. It was based on the hypothesis that if you could find the Primary 1-2 pivot, and if you ran the spiral from the origin of Primary 1 to its peak, and then did the same again, but counter-clockwise, and if you align the arc with the correction that follows in Primary 2, the outer edge of the spiral might predict when Primary 5 will conclude. This hypothesis works also on this chart, and with this count, and gives a projected end point of somewhere between June 2029 and July 2031. The chart includes three points with which you have to scale the chart so the arc aligns to them. This also aligns the arc with the Primary 2 correction and terminal point. If you then pull the chart across, you will see where Primary 5 and Cycle 1 should end, at least according to the Fibonacci spiral. It's necessary to switch to the 4D chart, as this time projection is so far out into the future you need to be on a higher timeframe to scroll the chart that far.
9) Where are we exactly now in this adjusted Elliott wave count, where the wave degree has been downgraded significantly? There are two main possibilities, in my view:
a) Subminuette 5 of Minuette 5 of Minute 1 of Intermediate 3 of Primary 3 of Cycle 1
b) An ABC in Minuette 2 of Minute 3 of Minor 5 of Intermediate 3 of Primary 3 in Cycle 1
Because of how bullish BTC is, I still lean towards a). What this means is that we may soon see a significant correction, in Minute 2, and it may be the last correction ever that sees BTC sub-$50k.
10) When I was young, a quote from Ernst Jünger stuck with me: "Something has to happen. Perhaps a catastrophe." If Bitcoin reaches target, in Cycle 1, I can only think that the world that we know now will have already collapsed.
Feel free to comment.
That last chart is wrong. Forget it. The Elliott wave count is wrong.
So what's different here?
Well, to be honest, a YouTube video on an Elliott wave count that made Elliot wave theory seem like the invention of cretins got under my skin, but did make a decent point. Elliott wave theory depends on a full price history. So the video got me thinking about the origin point of the Bitcoin price chart. I was using the Bitstamp chart in my last post, and I'm aware, of course, of the BLX ticker. But I didn't think that the difference between zero and $2.21 for Bitcoin would be as significant as in fact it is.
Sobering oversight on my part.
I looked again at the BLX, at the origin moment, when the chart starts. The BLX starts 18 July 2010. The Bitstamp chart starts 17 August 2011. As it turns out, those missing 13 months do in fact change the entire Bitcoin chart, and the Elliott wave count. And quite dramatically.
EXPLANATION & METHOD:
1) Attached here is a snapshot of those missing 13 months. Anyone casually familiar with Elliott wave theory should see immediately why this period is important, and why it does, in fact, change everything. There is a clear five-wave structure here. And the percentage gain in those 13 months was 830,000%. I had at the origin of my last chart a move in my wave count from 1 into 2. But I didn't think it would be so momentous as it is.
2) The next part is a bit technical. Basically, I took the bars from the BLX chart and went through a process of fitting them exactly into the Bitstamp chart, matching the dates by using bars and measured date ranges, because we're dealing with a time period which isn't on the Bitstamp chart at all. I then double-checked the exact value of key levels in my subsequent Elliott wave count against historical daily price data on Bitcoin on www.statmuse.com/. This was important, in order to accurately cross-check the wave structure against Elliott wave Fibonacci guidelines and have an accurate basis on which to then project subsequent waves and extensions - indeed the whole of the rest of the chart. Of particular importance was the 1 and 2 marked in green, which I'm taking as Primary 1 and Primary 2 in Bitcoin's accurate wave count.
3) Previously, I was using a Schiff pitchfork off the 2013 bull run peak and the subsequent low of the 2015 bear market, which I was taking as a potential Primary 1-2 pivot. It contained price action reasonably well, though I was never particularly happy about not being able to get an Original settings pitchfork on the Bitcoin chart. I still can't, because of the enormous price skew of 830,000%.
With the new bar patterns on the Bitstamp chart, I looked for a pitchfork that would make sense of price action. At first I turned on my old pitchfork and played with the origin line, to try to get price action to fit. To be sure, the best alignment I could get found some interesting interactions with the Schiff origin lines. Getting the old pitchfork to fit price action gave me, by hazard, an origin point in time, which I was curious to calculate. 23 March 2008. I have no idea if that date has any significance in the prehistory of Bitcoin. But given the actual reality that Elliott wave is almost metaphysical, as an indicator of sentiment, it wouldn't surprise me if something did that happen on that day or near to it that perhaps helped spur the creation of Bitcoin. But that's conjecture.
5) I used the same origin point in time, and resting on $0.00, because Bitcoin was created from zero, and adjusted a pitchfork to the precise data points I had cross-checked on statmuse.com for my new Primary 1-2 pivot. The result contains price action very meaningfully. Much more so, I would say, than the old pitchfork. This is also a clue to the wave degree in play across the whole of Bitcoin's price history.
6) From here, I worked on the Elliott wave count, checking major pivots against Elliott wave guidelines as follows:
Wave 2: 50%, 61.8%, 78.8% or 88.7% of wave 1
Wave 3: 168.8%, 175%, 227.7% or 361.8% of wave 1
Wave 4: 23.6%, 38.8%, 50% or 61.8% of wave 3
Wave 5: Inverse 123.6% - 161.8% retracement of wave 4; equal to wave 1; 61.8% of wave 1-3
It was the failure of price action after 2013 to meet these targets that got me thinking about the broader Bitcoin count and led to my last chart. In this new chart, I believe the count is more accurate, at the big picture level, but we still don't have waves that - yet - have met those guidelines off the initial Primary 1-2 pivot.
7) What does this mean?
a) For Elliotticians, the Bitcoin wave count is downgraded significantly. In my view, we have a Primary 1 and Primary 2, but everything else subsequent is at a lower wave degree.
b) The Primary 1-2 pivot in this new count obliges us to look again at all subsequent waves, and in particular take note of their Fibonacci relationships. Extremely obvious is that we have had a series of wave 2s, in subdivisions below Primary wave degree. This is what has been giving Bitcoin its dramatic peak and crash price history. In my view, that is now in the past. We are completing a wave 3 at Minor degree. Ahead are two major wave 4s, as the subdivisions of the Primary degree play out. What this means is that coming corrections are likely to be far more shallow than past "bear markets".
c) The next projected "bear market", depending on where the current Minor 3 within Primary 3 lands, may not break below $100k. The history of BTC losing 94%, 87%, 85% and 93% was the result, in each case, of a wave 2 correction.
d) BTC will pass $1m before even reaching its Primary 3 peak. By the time BTC puts in Primary 5, and completes one Cycle degree, 1 BTC is projected to be worth $1.27 billion.
8) Yes. But wait. As I said when looking at future targets in my last post, we don't know what a dollar will be worth in 2030-31, which is the time period I'm looking at for BTC to complete Cycle 1. My last post was about Fibonacci spirals. It was based on the hypothesis that if you could find the Primary 1-2 pivot, and if you ran the spiral from the origin of Primary 1 to its peak, and then did the same again, but counter-clockwise, and if you align the arc with the correction that follows in Primary 2, the outer edge of the spiral might predict when Primary 5 will conclude. This hypothesis works also on this chart, and with this count, and gives a projected end point of somewhere between June 2029 and July 2031. The chart includes three points with which you have to scale the chart so the arc aligns to them. This also aligns the arc with the Primary 2 correction and terminal point. If you then pull the chart across, you will see where Primary 5 and Cycle 1 should end, at least according to the Fibonacci spiral. It's necessary to switch to the 4D chart, as this time projection is so far out into the future you need to be on a higher timeframe to scroll the chart that far.
9) Where are we exactly now in this adjusted Elliott wave count, where the wave degree has been downgraded significantly? There are two main possibilities, in my view:
a) Subminuette 5 of Minuette 5 of Minute 1 of Intermediate 3 of Primary 3 of Cycle 1
b) An ABC in Minuette 2 of Minute 3 of Minor 5 of Intermediate 3 of Primary 3 in Cycle 1
Because of how bullish BTC is, I still lean towards a). What this means is that we may soon see a significant correction, in Minute 2, and it may be the last correction ever that sees BTC sub-$50k.
10) When I was young, a quote from Ernst Jünger stuck with me: "Something has to happen. Perhaps a catastrophe." If Bitcoin reaches target, in Cycle 1, I can only think that the world that we know now will have already collapsed.
Feel free to comment.
Comment:
Was talking to a friend and he mentioned the logarithmic growth curve model. I hadn't looked at it in a while, so I dug out a version of the same. I had it on the BLX chart, and copy-pasted the same indicators also to my amended Bitstamp chart. It is interesting to see that the Linear Regression Band indicator, which includes a predictive element, projects a set of lines that accord with the Fibonacci extension levels I mapped out on the naked chart according to my revised long range Elliott wave count described above. The second thing I find interesting is how volume and the Weis wave indicator (set to 6 to lower sensitivity) clearly show the macro wave structure on the BLX chart, while on Bitstamp, because the first 13 months of price data is missing, a distorted image emerges. Some argue that the first 13 months of BTC price data is irrelevant because the market was illiquid and the asset too young. From an Elliott wave perspective, they're wrong, and any model constructed on incomplete data will also, necessarily, be inaccurate. Interesting, too, to see the Moving Regression Prediction Bands indicator (the green bands dipping in 2015 and 2019) clearly show the subdivisions within the larger Primary 3 wave.
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