Elliot Wave Theory, Inflation, 2021 ATH vs 2022 Bottom | BTCUSD

The orthodox top for Bitcoin (BTCUSD) happened in April 2021 where a classic Elliot Wave (EW) 5-wave impulse was completed.

After 5 wave up (impulse) we get 3 wave down (correction) based on the Elliot Wave Principle.

Here is the chart:

Bitcoin (BTCUSD) 2020-2021 Bull Market Wave Count

In November 2021 Bitcoin went on to produce a higher high compared to April 2021, why isn’t this new high considered the top for technical analysis purposes?

In Elliot Wave Theory we have two main types of correction, a Zig-Zag which consists of 3 waves in a 5-3-5 sequence as seen below:

Elliot Wave Theory Zig Zag ABC Correction (5-3-5)

The flat is the correction shown in the first chart, with the 3-3-5 sequence.

The top is where the 5 wave ends and thus if a corrective wave later produces a higher high the top still the remains the 5th wave of the impulse.

Where I am trying to get at by introducing these simple facts about EW corrections, is the fact that inflation is the reason why the November 2021 peak was higher than April 2021, plain and simple.

When we go through a strong period of monetary expansion, this can distort the value of money and when the time for a correction comes instead of getting a lower low as is normal we get a higher high as happened back in Nov. 2021.

This is known and explained in many books from the 1960s, it is amazing to see how they can predict everything that it is happening now.

Another point comes out of this.

I was one of the first to look at the possibility of Bitcoin hitting around $11,300 as a market bottom back in early 2022. In fact, most of the people calling for this number was because of the dozens and dozens of trade ideas I shared making this point.

One of the biggest example can be found by visiting the link below:

The reason why I reached this conclusion was just by looking at past history but here comes inflation again… Put in a very simplified way, $15,500 today might be worth the same as $11,300 5-8 years ago, that’s inflation for you.

And that’s one of the reasons why we might never see $11,300 as the Bitcoin market bottom anymore.

Consider that the market is in… If not, think long-term, buy and hold.





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