Against all odds Bitcoin (BTC) has recovered from the dramatic sell off experienced in May, which saw BTC price plunging all the way below $30,000. Currently, the price of Bitcoin is coming off of a new all-time high of $67,016 (based on Bitstamp pricing), which has opened the door for the next big milestone of $100,000 to be reached.
Throughout this analysis we’re going to outline both the short-term and the long-term outlook for BTC price and see how sustainable is the $100,000 target.
Short-Term Analysis
In the short-term, based on the Elliott Wave analysis, it appears that the rally from the June low of $28,600 to the current all-time high is corrective in nature and not impulsive. In Elliott Wave theory, the entire rally from the June low can be labeled as a zig-zag pattern.
In essence the zig-zag pattern is comprised of 3 waves A-B-C, which can be subdivided as follow:
- Wave A is an impulsive 5 wave formation
- Wave B is a corrective abc formation
- Wave C is another impulsive 5 wave formation
If we break down (see figure above) the price structure from $28,600 low to the intermediary swing high $52,956, we can distinguish a 5 wave formation. The pullback from the $52,956 high developed in an abc price formation. From there, we’re currently developing wave C, which can also be broken down into a 5 wave price formation.
Generally speaking, wave C of a zig-zag pattern finishes between 1 and 1.272 Fibonacci extensions of wave A and wave B combined. In this case, the 100% extension falls at 63,233 respectively the 1.272 extension falls at 69,668.
The minimum Fibonacci ratio requirement is satisfied and wave C can be called completed. However, since the Elliott Wave count can be subjective, we have still room for a pullback in wave 4 as a result of some profit taking which can be followed by another swing higher to complete a more visible 5 wave price formation in wave C.
Long-Term Analysis
In the long-term, all the previous bullish cycles where build around the previous Bitcoin halving events. The impact of halving cycles on the price of BTC can be studied in the chart below.
In essence, the first halving event (28 Nov 2012) has inspired an increase of about 8,000% before experiencing an 86% crash. The second halving event (9 July 2016) has inspired an increase of about 3,000% before experiencing an 84% market crash.
Between the two halving events, Bitcoin price gains have dropped by 62.5%. If we take that into consideration, the third halving event (11 May 2020) can inspire a rally of just 1,125%, which is 62.5% decrees from the previous bullish cycle.
Final Words
In summary, if the current bullish cycle inspired by the third halving event only gains 1,125% it will give us a target of around $107,000. However, in the short-term we can expect some type of retracement unless the bulls take charge and manage to keep BTC price above the previous all-time high.
Thank you for reading!