Bitcoin has dropped more than 30% in less than a week since peaking at 19700 at the beginning of this week. How far further will price drop? Has the burble burst or it was just a correction of the strong rally? The following 22 December Bitcoin Price prediction is based on Elliott wave theory.
22 December, AtoZForex -When the Chicago Mercantile Exchange (the biggest exchange in the world) this week added Bitcoin to its list of instruments, it was meant to be bullish for the Crypto currency. Price reacted (not necessarily to the news) and peaked close to $20000. While many speculators expected price to hit close to $40000 this year, we expected a correction – the biggest this year. Why did we expect this to happen?
Most times, prices of any publicly traded instruments with huge trading volumes are driven by the psychology of the participants – the investors in this case. News and fundamental events can cause short term moves. The trend is determined by the mass psychology of the traders and investors. Elliott wave theory explains the psychology in form of market waves and patterns that are repetitive.
Basically, Elliott wave theory postulated that in a bullish trend there will be 5-waves UP and 3-waves DOWN to follow in order for a cycle to complete. What does this say about Bitcoin? In our previous updates, we mentioned that the 3rd wave UP was about to complete and a big correction -4th wave- will be seen. The chart below was used in the last update.
The 3rd minor wave now appear closer to completion than not. Price could rally to $18000-$19000 before this happen. A strong dip to $12000 or below is likely especially if there is a strong break below $16000. Bitcoin could still close at around $20000 this year but a strong dip is imminent.
Psychologically, some huge investors would think it was time to cash out on their huge profits when price was about to hit $20000. That’s what usually happens at the end of the 3rd wave – period of SURPRISING DISAPPOINTMENT as some late investors enter. The chart below shows what could happen next.
22 December Bitcoin Price prediction: what next?
Price is already about hitting the first bearish target at $12000. It could go deeper to $10000 or $8000 before the rally resumes. Anything less than $8000 would mean a big crash is coming. The rally could continue at the end of the correction. The bearish move is caused by selling activities of huge holders. Late investors that bought high could also panic to sell to reduce what they may perceive as a bad investment. When all shorting is over, fresh optimism (opportunity) will arise and more buying will happen for price to resume the 5th wave – FINAL ADVANCE of this degree. Stay tuned for more updates.
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