First of all I will make some fundamental remarks, giving my general opinion where the crypto market currently is and what this means for prices. After that I will show some charts which are additional reasons why I think that the current price correction is probably not over yet. You can skip to part II if you are only interested in the prognoses.
Part I – fundamental thoughts
The first cryptocurrency Bitcoin was created for different purposes. An important one was the use of it as a substitute for cash payments. If Bitcoin can perform as such was discussed already years ago and the consensus is that it cannot do that without being altered, or more precicely withouth a scaling system. A clash of different groups suggesting different changes culminated in hard forks giving us the current Bitcoin and different alternatives like Bitcoin Cash or SV. Bitcoin cannot perform the task as cash in its current state, the latter are not having too much trust of the community (see prices). Currently Bitcoin is not a substitute for cash but what is sometimes called “digital gold”, an asset used to “store value”. Basically it’s just a big speculative object, where people invest money into hoping that others invest more money into at a later time. I think that market prices were driven by an ideology of creating new money in the first few years. That changed in 2017 when the first pure price speculative bubble was pumped. This was the first time Bitcoin was widely advertised in main stream media and even banks advised to invest in bitcoin.
My fundamental view is that the crypto currencies currently cannot grow much more because they only have this digital gold feature as their sole reason on why to invest in it. This is why only Bitcoin itself and not the other crypto currencies has seen this kind of price increase in 2019. Until the scaling feature is implemented we are stuck in a big corrective phase. I think that after that phase only a few crypto currencies with novel features will still be traded, leaving most crypto currencies dead. Obviously leaving the decentralization feature is important for any crypto currency, thus the advent of centralized scalable currencies like libra are not ending the correction phase.
Part II – technical chart analysis
Now to the technical part. The following treatise presupposes that the Elliott Wave Theory is basically capable of giving good prognoses of different markets.
The bitcoin market reached its top in December 2017. From those highs we entered a correction. Now the question can be asked if the correction is already over or if it will be extended. The first half of the year 2019 gives hope that the correction is indeed over. But, I want to argue, that the altcoin markets suggest a different outcome.
First let us see what happened since the highs in 2017.
The whole wave from December 2017 to December 2018, which marks the lows, is not impulsive. That means, that a correction could basically have been finished at the lows. I count the wave as an ABC (blue). Notice that you can count it as WXYXZ (white), but it actually doesn’t matter in the bigger picture, since all those corrective waveforms can both be a completed correction or a part of a correction.
We also see that the wave from the lows can be counted impulsive. If it is indeed impulsive that means one of two things. Either it is a wave 1 after a completed correction, or it is an impulsive wave a within a correction. All possibilities are shown here.
We have the following possibilities:
White: The correction is over (wave IV) and we have a new impulse up which should supersede the all time highs of 2017 in a wave 5..
Red: The correction is over (wave II and we have a new impulse up which will supersede the all time highs of 2017 in a wave 3.
Yellow: We are in a big triangle correction since the highs of 2017.
Blue: We are in a wave B up which itself is part of a big ABC correction.
Since triangles are always the least probable structure I would discard the yellow scenario. The question remains if the price will move to new all time highs in an impulsive manner or if we are in a big correction. Now, looking to a few of the more important altcoin markets we see that it is extremely improbable that we will see new all the highs in all markets simultaneously.
Presupposing that the whole cryptocurrency marked is correlated, Bitcoin has a hard nut to crack if it wants to make a new all time high. On the other hand we see that we have in all those altcoin markets increases of the prices that are not meaningless. This gives us reason to believe that none of these markets will cease to exist within the next few months, Also all of those markets are probably in corrective waves since mid-2019, suggesting that we will see another price increase wave within the next weeks and months (shown in the charts). But since this price increase will probably not be to new all time highs in these markets, I assume that at least scenario Red is improbable and even would suggest that scenario White is not the favored one. Leaving scenario Blue as the one I suggest will play out.
My first alternative would be White.
The blue wave C (first chart) or the big correction following white V resp. (second chart) will lead to a massacre in altcoin markets which will leave a lot of different coins unused and leveling around zero.
All charts are made with guidants by godmode-trader.de
Critical answers are welcome