Simple, But Nuanced

In my September 20th update titled “Bitcoin Has Appeared to Have Struck a Meaningful Top,” I noted that a top in the premier cryptocurrency was expected and likely imminent. Since that post, however, Bitcoin has reached a new all-time high, moving contrary to that prior expectation.

My interpretation of this updated price action is simple, but nuanced.

Simple in the sense that, since the September 20th update, price has only advanced in three waves, a hallmark of corrective, not impulsive, movement. Nuanced in the sense that, at times, corrective patterns can extend beyond prior highs and still maintain their corrective nature, as long as the internal structure remains a three-wave pattern.

Some may point out that the prevailing trend has appeared bullish since the June 25th low at $98,242. Yet, in my view, the August 13th high at $124,501.31 completed all the necessary wave components for a terminal structure. While it’s rare, retracements can exceed prior highs and still be valid as part of a corrective sequence, structure is what determines that validity, not price level alone.

That said, if Bitcoin does continue higher and makes an incremental new high, I will adopt my alternative count, which assumes the August 13th top was off by one degree and that the final fifth wave is only now completing.

While these distinctions may seem technical, they are crucial. If the recent rally represents an irregular B-wave correction, it leaves the door open for a C-wave decline potentially forming a flat structure or a retracement that falls short of the initial A-wave low. Conversely, should another marginal high occur first, it would still likely mark a major peak, only delaying the onset of the broader corrective phase.

In summary, absent a new incremental high, my expectation is for a C-wave decline targeting the low $109,000 region minimum, as the next major phase of Bitcoin’s correction.