Bitcoin Longs Beyond $43K Getting Attention, Analyst Suggests
The analyst who accurately predicted the recent drop in bitcoin’s price to $38,000 now believes that levels above $43,000 are suitable for initiating new bullish positions on the cryptocurrency.
“In light of the reversal indicators indicating that a tradable low has been reached, we should focus on long positions. From a risk management standpoint, we should re-enter long positions once bitcoin breaks above $43,000,” Markus Thielen, the Founder of 10x Research, stated in a note to clients on Monday.
Thielen’s optimistic perspective is based on the Elliot Wave theory, which presupposes that prices exhibit wave-like behavior rather than simple patterns, making it possible to anticipate future movements by observing repetitive wave patterns.
According to the theory, trends progress in five waves, with waves 1, 3, and 5 serving as “impulse waves” that represent the primary trend. The remaining waves are “retrace waves” that indicate a temporary pause in the primary trend.
According to Thielen, bitcoin has been following a five-wave bullish pattern since early last year, and the recent pullback from approximately $49,000 to $38,500 corresponds to wave 4 or the temporary retracement. Now, wave 5 has commenced and could drive prices above $50,000.
“Elliot Wave analysis has also identified this retracement to $38,522 as wave (4) with a wave (5) projection of $52,671 – potentially by the end of Q1, 2024,” Thielen stated.
The bullish outlook aligns with the decrease in selling pressure from investors who have been cashing out of the Grayscale Bitcoin Trust (GBTC), a popular crypto investment vehicle. Profit-taking from GBTC was partially responsible for bitcoin’s decline during the wave 4 correction following the launch of spot ETFs in the United States on January 11.
“Possible catalysts for an upward move could revolve around the diminishing impact of Grayscale GBTC selling on the price of bitcoin, the fact that stocks are reaching new all-time highs, and Google’s decision to allow Bitcoin & Crypto ETF advertisements starting today,” Thielen added.
As per CoinDesk data, bitcoin was trading at $42,160 at the time of writing, representing a 0.3% gain for the day.