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When a stunning $69,000 coin peaked in late 2021 amid a feverish zero-to-hero success story and a perceived wave of crypto millionaires and influencers, Bitcoin (BTC-USD) was missing a key ingredient) rise, regulation. As the cryptocurrency’s prodigal son heads for a notable bullish reversal fueled by two SEC filings by BlackRock (BLACK) and Fidelity, which is viewed as an institutional adoption of crypto. One could imagine that if these heavyweights adopt an ETF-like model for Bitcoin, something will eventually give way.
According to Reuters, the SEC recently voted with Nasdaq in a filing for a BlackRock spot bitcoin ETF. In recent years, the SEC has denied dozens of spot Bitcoin ETF applications, citing the standards aimed at preventing fraudulent and manipulative practices and protecting investors. Subsequently, the ETF industry tries to do this address these concerns.
Last Friday, CBOE filed another filing with the SEC for a Fidelity bitcoin ETF. This file called Coinbase (COIN) as a platform that would support police manipulation in the proposed ETF.
In the past year alone, bitcoin posted a 100 percent surge from the $15,000 low, weathered several bank failures and of course the demise of cryptocurrency exchange FTX technically, and has now technically made a higher high to start a bullish third to overcome a rejection on the monthly chart and move directly towards the $40,000 price region.
So, can this uptrend be taken seriously, or is it perhaps a bull trap?
Technically, a three-wave structure may break out, which is a possible target that I have identified in the structures of various major US stocks but have documented with Seeking Alpha THe As the old saying goes, we don’t have a crystal ball, but we can imagine that if pressure for some form of regulation mounts, positive news on this front will make this bullish breakout come true.
To give a brief background story on Bitcoin, as mentioned above in the article, this cryptocurrency peaked at $69,000 in October 2021. By creating a bearish three-wave structure, I was able to see that a break below $32,000 would first lead to a target of $14.9,000 and then $10,000 if the former shows no signs trend reversal. Bitcoin reached the mid-$15,000 area before showing a three-wave pattern on the weekly chart in early 2023, which has now evolved into the three-wave pattern that we will look at further in this article.
Looking at the chart below, we can see the bottoming around the mid-$15,000 area with quite a bullish move higher. It was only a few months later that the bearish rejection candle was printed, giving way to the possibility of a third wave to the north, this now wave one two structure should be breached on top.
Bitcoin monthly chart (C dealer)
Above that, we can then see an attempt to trigger the third wave so far by breaking the rejection line at $30.5k. If this trend continues, we can expect $40,000 first and then $46,000 before we would see the $15,000 region again.
In closing, I’m giving a buy signal on Bitcoin because it has technically surpassed $30,000. However, I am aware that a positive regulatory move could be a factor in both stopping the wave and how fast it could rise. I expect Bitcoin to hit $40,000 initially within the next 30-120 days.
About the three-wave theory
The three-wave theory was developed in order to be able to determine the exact probable price development of a financial instrument. A financial market cannot move significantly up or down without making waves. Waves are essentially a mismatch between buyers and sellers, and paint a picture of a financial instrument’s likely direction and destination. When waves one and two are formed, it is the higher high/lower low point that gives the technical clue as to the future direction. A wave one will continue from a trough to a peak before meeting a sufficiently strong rejection to then form wave two. When a third wave breaks into a higher high/lower low, the only likely numerical target bearing available on a financial chart is the equivalent of the low to the peak of the wave. It is very likely that wave three will attempt to numerically replicate wave one before making its future directional decision. Price may surpass the third wave target, but only evidence that a price was able to survive prior to rejection can be considered a likely target for a third wave. The link to the Ward Three Wave Theory is in my bio.
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