Bitcoin price It continues to move sideways in an increasingly tight trading range to the dismay of crypto investors. Bearish sentiment across space has been the most prominent in years — and likely even more bearish than the bear market of 2018.
This is why the latest correction was even more painful than Black Thursday, despite BTCUSD trading at roughly the same price as last year.
Bitcoin’s Bearish Sentiment Can Blind a Bull Market
You may not know it by current price action, sentiment, or even economic background, but there is a strong opportunity for Bitcoin Still in a bull market.
An ongoing sideways consolidation phase could eventually lead to another unexpected rally to the upside, according to the Bitcoin market structure that mimics an Elliott Wave Theory.
Related reading | Bitcoin Bear Market Comparison Says It’s Almost Bull Season
An impulse wave is five waves in total, with three of those waves moving in the direction of the primary trend. Two waves moving in the opposite direction of the primary direction – Same trend as the bear market.
Ascending and descending waves alternate, and the characteristics of each wave also alternate between sharp and sideways. Bullish waves are called impulses and they also move in the same five-wave pattern. Corrective phases are usually in the ABC pattern.
The final wave of wave V of wave 5 | Source: BTCUSD on TradingView.com
It is very clear that the price of Bitcoin follows this structure on a variety of scales. All of these structures indicate that there may be grand finale It is still left to complete the impulse wave with a strong five-wave.
Why continuous side roads are more painful than Black Thursday
If this is what could be in the future, why exactly is the sentiment so bearish? For example, bearish sentiment is often the driver of the fifth wave. At this point in the trend, fundamentals are no longer improving at the same pace that attracted market participants. Profit taking is increasing.
Wave Fives Driven by Fear. How does this fear develop? By having a market on the wrong side of the trade, due to excessive bearish sentiment. Such a situation causes participants to chase entries as prices rise.
Bearish sentiment is the result of positioning. The bears either sold, sold, or expected further declines. Sentiment is very bearish not because Bitcoin saw horrific new lows like Black Thursday. Sentiment is very bearish as it took twice as long to get to anywhere exactly.
Sideways stabs more painfully than a sharp correction | Source: BTCUSD on TradingView.com
If Black Thursday lays at the bottom of the second “sharp” wave, the market may move painfully “sideways” in the fourth wave according to Elliott wave rotation law. Although the March 2020 correction saw BTCUSD drop more than 70% from the first wave to the bottom of the second wave, it only took about 250 days. Intra-cycle tops on the RSI as the third wave places the top at a possible fourth wave low at roughly the same exact price as it was 14 months ago.
Although investors have not lost anything in value since then, there is a cost to their time. This patch went sideways but took over 460 days to get mostly anywhere. Even the bear market itself only took 370 days to reach the bottom of the capitulation. In a world where instant gratification is common, Bitcoin has already been expected to exceed $100K in value, war is waged, economic crisis looms, and more – it’s no wonder why the masses are heading for a Bitcoin plunge.
Related reading | Now or never: Bitcoin bases its long-decade parabola curve
But what if they are wrong, and the fifth wave remains? This theory is shared by Paradoxical David Hunter, which reminds us that “a bull market is climbing the wall of anxiety”. Hunter has made chilling calls in the past, predicting a “once in a generation thaw” any day now, based on bearish sentiment.
The idea is that after all this sideways time, the market has increased its price on either the downside, and instead the market corrects to the upside in a dramatic explosion. When the fifth wave completes, greed will blind the market and the bearish price action causing all this negative sentiment will surprise everyone.
“Dressing markets are slipping down the slope of hope.”
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Featured image from iStockPhoto, Charts from TradingView.com