Bitcoin: How Investors Extrapolate the Trend
“Elliott can prepare you psychologically for the fluctuating nature of price movement”
by Bob Stokes
Updated: July 09, 2021
Investors tend to extrapolate the current price trend of a financial market into the future.
This applies to stocks, gold, oil and other markets, including bitcoin.
For instance, back in March and early April, as bitcoin was climbing to its all-time high above $64,000, many speculators saw no end to bitcoin's bullish prospects.
These two sample headlines make the point:
- Can BTC Really Hit $115K by Summer's End? (Nasdaq.com, March 17)
- Bitcoin Price Prediction: Why Bitcoin Could Rocket To $400,000 In 2021 (April 8, Forbes)
Well, shortly after those headlines published, on April 14, the cryptocurrency hit its all-time high of just shy of $65k.
Now that bitcoin has plummeted and lost roughly half of its value, here's a July 1 CNBC headline:
Most investors see bitcoin ending the year below $30,000, CNBC survey shows
These were professionals -- "about 100 chief investment officers, equity strategists [and] portfolio managers" who were surveyed from June 23-30.
That forecast may prove to be correct.
But, let's face it, the "below $30,000" prediction is not exactly going out on a limb given the price has been trading around that very level.
The question is: Did the majority of professional money managers anticipate that bitcoin would be below $30,000 by the end of 2021 before the cryptocurrency started to plunge in April?
That's when the forecast would have been useful.
As Robert Prechter's book, Prechter's Perspective, says:
Most published forecasts are at best descriptions of what has already happened. I never give any forecast a second thought unless it addresses the question of the point at which a change in trend may occur.
This brings us to Elliott wave analysis. You see, the Elliott wave method does "address the question of the point at which a change in trend may occur."
As Frost & Prechter's Elliott Wave Principle: Key to Market Behavior, says:
After you have acquired an Elliott "touch,"... catching a turn becomes a fairly common experience... Furthermore, by giving you a feeling of confidence as to where you are in the progress of the market, a knowledge of Elliott can prepare you psychologically for the fluctuating nature of price movement and free you from sharing the widely practiced analytical error of forever projecting today's trends linearly into the future.
Right now, you can learn what the Elliott wave model is suggesting is next for bitcoin and other cryptocurrencies in our just-published July Global Market Perspective.
Just follow the link below to get started.
Your Global Portfolio: Are You Ready for 2021’s Second Half?
Get prepared for what EWI's global analysts see ahead for the second half of 2021.
You see, our Elliott wave experts are telling subscribers about key price junctures in major financial markets -- like global stocks, bonds, cryptocurrencies, metals, energy, forex and much more.
Major trend changes are afoot -- according to the Elliott wave model.
Get ahead of these changes by delving into the 50+ pages of our new July Global Market Perspective.
Simply follow the link below to get started right away.
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