Bitcoin is dead: Expect a rally to $166k

Indeed, based on the Bitcoin Fear and Greed Index, which has been at Fear to Extreme Fear levels for almost a month now, one would assume that Bitcoin (BTCUSD) is dead. More about that later, as in the meantime, Bitcoin fell “only” ~30% from its all-time high at last week’s low. Besides, in our previous update, we observed that

“Given the highly negative sentiment readings, oversold technical indicators, the four phases, and our preferred [Elliott Wave] EW count, we conclude that a new Bear market has not yet started but that the current decline is a correction within a more significant uptrend ending later this year, targeting $148500-185640, with an ideal of ~$166.7K.”

Fast-forward and BTC currently trades at around the same level as back then. See Figure 1 below.

Figure 1. Preferred detailed, long-term EW count for Bitcoin. Weekly chart top, monthly chart bottom

Based on the weekly and monthly chart, where we count down weeks and months as corrective, 2^nd, and 4th waves, allowing us to account for >99% of all price action, we find Bitcoin still needs at least one larger (red W-v) higher. Fourth waves tend to typically retrace 38.2% of the prior third wave, which in this case targets $77350. The correction in August 2024 reached the lower end of such a zone on a closing basis. See the blue horizontal arrows in Figure 1A. Besides, July 2021 and September 2017 saw 56 and 43% declines, respectively, which places the current ~30% decline in perspective. See Figure 1B.

The weekly RSI5 reached ~22 in early March, and such low readings during the current Bull market coincided with significant bottoms; see Figure 1A. Lastly, the weekly MACD increased in December 2024 compared to March 2024, confirming the higher prices (dotted green arrow). Thus, the price charts’ EWP count and technical indicators suggest the Bull is not dead. Since it pays to shop around, aka get a 3^rd party opinion, it is prudent to see if other pundits’ insights align with one’s assessment.

Figure 2. Bitcoin’s Fear and Greed Index, Global M2 Money Supply, 38.20% retracement level, and Fibonacci-target overlaid with price

Figure 2A shows that the next ideal upside target is $166.7K, based on Fibonacci extensions. Figure 2B shows that the Global M2 Money Supply highly correlates with Bitcoin’s price (since early 2024). It suggests a rally this spring and summer, arguably already starting now. Figure 2C shows that if Bitcoin closes this month above $79,583, the Bull continues, whereas Figure 2D tells us extremely low Bitcoin Fear & Greed readings during Bull runs often coincide with significant lows. Shaded areas are bear markets based on the four phases of Bitcoin (Figure 1B) and excluded.

Combining a plethora of data points with our preferred EW count, the weight of the evidence tells us a new Bear market has not yet started but that the current decline is a correction, about to conclude, within a more significant uptrend. We expect the current Bull to target $148500-185640, with an ideal of ~$166K by the end of this year.

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