Are We Entering Wave V? Analysts Predict Continued Bitcoin Downturn

As the cryptocurrency market remains stagnant, analysts suggest we may be approaching the final phase of the current bull run, but they also warn of potential further declines. Significant external factors are currently hindering a recovery for Bitcoin (BTC).

Key Takeaways

Analysts predict that Bitcoin may soon enter Wave V but foresee potential further declines.
Factors like US tariffs, geopolitical tensions, and political risks are currently hindering Bitcoin's recovery.
BTC has recently dropped below crucial support levels, raising concerns about further price declines.
Market sentiment is shifting from fundamentals to geopolitical issues, impacting the broader crypto market.

Bitcoin

Last week, the crypto market experienced a noticeable uptick, but it dipped over the weekend and started this week on a downward trend.

In the last 24 hours, BTC fell from an intraday high of $95,467 to a low of $92,263. As of Monday afternoon (UTC), BTC is trading at $92,973, reflecting a 2.6% increase over the week and a monthly gain of 5.4%.

Bitcoin Trading

Understanding Wave V: Analyzing Market Movements

In a recent correspondence, John Glover, Chief Investment Officer at the digital asset financial services firm Ledn, stated that we are currently in Wave IV of this major bull run. He believes we might soon be entering the fifth and final wave.

According to Glover, the target for the completion of this wave is projected to be between $71,000 and $84,000 for BTC. The breakdown of this corrective wave follows an A-B-C structure, as illustrated in the chart below.

Wave Structure

The critical question now is whether we will follow the yellow path depicted for Wave IV or the purple path, which indicates another decline to $71,000, according to Glover.

“Based on the analysis of Wave C within this corrective pattern, it seems probable that we're headed for another dip,” he notes.

To confirm the path we are on, we need to observe:

A break and close above $104,000 (the bottom of Wave A), which would indicate a transition to Wave V following the yellow path.
A breach below $80,000, suggesting a drop into the low $70,000 range before a potential upward move.

For context, Wave IV represents the fourth phase in a five-wave bullish impulse sequence, according to the widely-regarded Elliott Wave Theory. In this model, the positive trend consists of five phases, where Wave IV corrects against the trend of Wave III, before Wave V emerges to reach new highs. This is typically followed by three waves of declining market performance.

Continued Declines Expected

Nic Puckrin, a digital asset analyst and co-founder of the Coin Bureau, pointed out that BTC has fallen below a crucial support level of $94,000, which was pivotal in the January breakout trend.

He attributed this downturn to news surrounding tariffs and geopolitical tensions, particularly stemming from the US.

“At this juncture, unless buyers return to boost the market, further declines are likely, with strong support sitting around $88,000. While there was a slight rebound bringing BTC back above $93,000, it's not especially significant,” Puckrin stated.

With markets in the US closed today for a federal holiday, volatility remains a concern. Whether we see a deeper sell-off hinges on whether BTC ends the day below $90,000, Puckrin added. This scenario could prompt ETF holders to exit their positions when US markets reopen on Tuesday.

Puckrin concluded that with altcoins experiencing losses, precious metals are gaining strength. “Investors hoping for a shift from metals to altcoins may be disappointed, as uncertainties surrounding Greenland are likely to escalate before they improve,” he stated.

Bitcoin as a Hedge Against Institutional Risks

Samer Hasn, a senior market analyst at the global multi-asset brokerage XS.com, explained that Bitcoin's recent downward trend results from a combination of profit-taking and a "risk-off" sentiment. This follows a resurgence of political risk in the US, alongside ongoing geopolitical and trade tensions that are affecting Bitcoin's potential recovery.

Factors contributing to this environment include a criminal investigation involving US Federal Reserve Chair Jerome Powell, along with delays in confirming the bank's new head, effectively paralyzing the leadership transition at the central bank.

“The loss of autonomy for the Fed could potentially signify the end of dollar dominance, fundamentally altering the global financial landscape,” Hasn quoted Ray Attrill from National Australia Bank.

This situation impacts market sentiment in crypto, as uncertainty in the Fed’s autonomy often prompts a sell-off from dollar-denominated assets, he argued.

“For crypto markets, this narrative surrounding a 'politicized dollar' presents a long-term bullish case, even in the face of declining prices. If investors lose confidence in US government debt and the Fed’s independence, decentralized assets like Bitcoin, alongside tangible assets like gold—which has already seen significant price increases—will serve as a rational hedge against systemic decay.”

Additionally, global geopolitical tensions, particularly those between the US and China, and the US and Europe—especially concerning Donald Trump’s threats regarding Greenland—must also be taken into account.

As we anticipate upcoming US PCE inflation data and the World Economic Forum in Davos, strong inflation metrics could quell hopes for an imminent rate cut, leading to a reassessment of bonds and equities.

Lastly, the Bank of Japan's unexpected hawkish stance or intervention to support the yen could potentially create a major liquidity crunch, triggering turmoil in already jittery Western markets.

Hasn concluded that price movements will likely transition from being driven by "market fundamentals" to being influenced by "geopolitical dynamics."