The analyst who accurately predicted the recent decline of bitcoin to $38,000 now suggests that levels surpassing $43,000 are conducive for initiating new bullish positions on the cryptocurrency.
Markus Thielen, Founder of 10x Research, conveyed to clients on Monday that given the reversal indicators signaling a tradeable low, the focus should shift towards long positions. From a risk management standpoint, he recommends re-entering long positions when bitcoin surpasses the $43,000 threshold.
Thielen’s optimistic outlook is grounded in the Elliot Wave theory, which posits that prices follow wave patterns rather than simplistic trends, allowing future movements to be anticipated through the observation of repetitive wave patterns.
According to this theory, trends evolve in five waves, with 1, 3, and 5 representing “impulse waves” indicating the primary trend, while the others are “retrace waves,” denoting a temporary pause in the primary trend.
Thielen suggests that bitcoin has been adhering to a five-wave bullish pattern since early last year, with the recent pullback from around $49,000 to $38,500 constituting wave 4, or the temporary retracement. Now, with wave 5 underway, prices could potentially exceed $50,000.
“Elliot Wave analysis has also labelled this retracement to 38,522 as wave (4) with a wave (5) projection of 52,671 – potentially by the end of Q1, 2024,” noted Thielen.
This bullish perspective aligns with a decrease in selling pressure from investors profiting in the Grayscale Bitcoin Trust (GBTC). Profit-taking was a contributing factor to bitcoin entering a wave 4 correction following the launch of U.S.-based spot ETFs on January 11.
Thielen identifies potential catalysts for an upward move, including the diminishing impact of Grayscale GBTC selling on bitcoin’s price, the surge in stocks reaching new all-time highs, and Google allowing Bitcoin & Crypto ETF advertisements starting today.
At the time of writing, bitcoin is trading at $42,160, reflecting a 0.3% gain on the day, according to CoinDesk data.
