Observing how Bitcoin has been moving for the last few months, I regret I wasn't a bit more careful with it and see that it's all an Elliott Wave, so, how does that work?
In this pattern, Waves 1, 3, 5 are motive, meaning they go along with the overall trend, while Waves 2 and 4 are corrective.
Here is a short description of what happens during each wave.
Wave 1
Bitcoin makes its initial move upwards.
This is usually caused by a relatively small number of people that all of the sudden (for a variety of reasons, real or imagined) feel that the price of BTC is cheap so it’s a perfect time to buy. This causes the price to rise.
Wave 2
At this point, enough people who were in the original wave consider BTC overvalued and take profits.
This causes BTC to go down. However, BTC will not make it to its previous lows before BTC is considered a bargain again.
Wave 3
This is usually the longest and strongest wave. BTC has caught the attention of the mass public.
More people find out about BTC and want to buy it. This causes BTC's price to go higher and higher. This wave usually exceeds the high created at the end of wave 1.
Wave 4
Traders take profits because BTC is considered expensive again.
This wave tends to be weak because there are usually more people that are still bullish on BTC and are waiting to “buy on the dips.”
Wave 5
This is the point that most people get on BTC and is most driven by hysteria.
Traders and investors start coming up with ridiculous reasons to buy bitcoin and try to choke you when you disagree with them.
This is when it becomes the most overpriced.
In this pattern, Waves 1, 3, 5 are motive, meaning they go along with the overall trend, while Waves 2 and 4 are corrective.
Here is a short description of what happens during each wave.
Wave 1
Bitcoin makes its initial move upwards.
This is usually caused by a relatively small number of people that all of the sudden (for a variety of reasons, real or imagined) feel that the price of BTC is cheap so it’s a perfect time to buy. This causes the price to rise.
Wave 2
At this point, enough people who were in the original wave consider BTC overvalued and take profits.
This causes BTC to go down. However, BTC will not make it to its previous lows before BTC is considered a bargain again.
Wave 3
This is usually the longest and strongest wave. BTC has caught the attention of the mass public.
More people find out about BTC and want to buy it. This causes BTC's price to go higher and higher. This wave usually exceeds the high created at the end of wave 1.
Wave 4
Traders take profits because BTC is considered expensive again.
This wave tends to be weak because there are usually more people that are still bullish on BTC and are waiting to “buy on the dips.”
Wave 5
This is the point that most people get on BTC and is most driven by hysteria.
Traders and investors start coming up with ridiculous reasons to buy bitcoin and try to choke you when you disagree with them.
This is when it becomes the most overpriced.