Bitcoin, the world's largest and most well-known cryptocurrency, has experienced a tumultuous journey over the past year. The digital asset reached an all-time high of $68,925.0 on November 10th, 2021, but since then, it has dropped 77% and is currently trading in a narrow range.
The crypto market has been influenced by various factors such as inflation, monetary tightening, and the recent FTX scandal, which have impacted the overall crypto ecosystem. In this article, we will explore why bitcoin is likely to trade in a range in the coming months, based on a monthly timeframe analysis using the Elliot Wave Principle.
According to this principle, bitcoin is currently in a 3-wave flat pattern on the monthly timeframe. This pattern is characterized by three waves in the same direction and two corrective waves, with the final wave completing the pattern. In the case of bitcoin, the bull market completed the 3-wave pattern on November 10th, 2021, at a high of $68,925.0.
The completion of the 3-wave pattern on the monthly timeframe suggests that a 3-wave correction is highly probable in the case of bitcoin. This correction is expected to retrace some gains made in the previous bull market and provide a temporary pause in the upward trend. Investors should be aware of this correction and adjust their positions accordingly.