Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Meet SuperMania and its Ever-Present Sidekick, SuperMeltdown

Currencies / cryptocurrency Jul 14, 2021 - 12:47 PM GMT

By: EWI

Currencies

Advance warnings about the recent crypto crash were there all along.

How did almost everyone miss them?


Anyone on Planet Earth in 2021 knows about the rise and fall of digital currencies.

Even many kids are aware.

But what has baffled just about everyone is what's BEHIND the moves.

This was made especially clear by the recent cryptocurrency crash, which saw Bitcoin plunge 50% from its April 15 peak. That move alone eliminated $1.3 trillion of wealth.


Days are lit powder kegs; like June 22, when Bitcoin plummeted below the $30 k level to erase its entire 2021 gains before recovering 24 hours later.

A June 4 CNN article quoted one spooked investor:

"... It's just stupid. I'm never going to have as much invested in crypto again."

Another June 9 UK Independent article led its pages with: "Crypto Market Faces 'Moment of Truth' After Crash Wipes Value from Ethereum and Dogecoin." It said the plunge had two causes:

  1. On May 12, Tesla CEO Elon Musk tweeted that the electric carmaker would "stop accepting bitcoin for car purchases, citing environmental concerns."
  2. On May 18, China banned the country's payment institutions from using cryptocurrencies.

Yet, a bit of analysis shows that the peak had been registered almost a month BEFORE the Musk and China announcements.

In fact, as decades of historical research have shown, financial markets are NOT driven by external events like these. Rather, they are driven by recurring waves of optimism and pessimism among investors, traders and society at large.

That's great news. It means that knowledgeable investors can predict the waves, and therefore market prices, to a surprising degree.

The "Crypto Trading Guide: 5 Simple Strategies to Catch the Next Opportunity" summarizes how the Elliott Wave Principle works. It is based on these facts:

  1. Mass psychology swings from excessive optimism to pessimism and back again.
  2. You can see these swings, or waves, in the markets, where optimistic and pessimistic investors bid prices up or down accordingly.
  3. The waves repeat, making them quite predictable.

When you know which Elliott wave a market is in, you can forecast what's coming next. This gives Elliott wave traders and investors a very important advantage.

Here's just one recent example. Weeks before Musk's May 12 tweet and China's May 18 bitcoin ban, the Elliott Wave Financial Forecast predicted the top in cryptos was near. It showed subscribers several charts, including this one highlighting Paul Montgomery's famous Magazine Cover indicator.

The Financial Forecast explained:

The Magazine Cover indicator... postulates that when a financial trend is established enough to reach the cover of a general interest news magazine, which is rare, that trend is near exhaustion.

The magazine cover at the top of bitcoin's long rise is from the latest issue of Newsweek. The story says that 'The Smart Money' is betting on bitcoin.

Bitcoin's susceptibility to such a signal is clear from the 'Rhymes With Bitcoin' BusinessWeek cover at the bottom of the chart. As The Elliott Wave Theorist noted on December 21, 2018, the negative appraisal appeared a few days from bitcoin's December 14, 2018 low.

A few days later, an Update to Financial Forecast told subscribers:

Barron's magazine put bitcoin on its cover over the weekend. On Wednesday, April 14, Coinbase, 'the fastest-growing exchange at the center of the speculative frenzy in cryptocurrencies,' (Bloomberg, Apr. 12) will issue an IPO with an expected valuation of $100 billion, more than the New York Stock Exchange and the NASDAQ combined.

Bullish sentiment toward cryptocurrencies, and in particular bitcoin, is extreme and compatible with a change of trend.

To be clear, both of these issues of the Financial Forecast warned subscribers BEFORE bitcoin's peak, BEFORE bitcoin's crash, and BEFORE Musk and China made their announcements.

This bearish bitcoin analysis was only the beginning of how Elliott waves predicted cryptos' top and then, early in the plunge, identified it as a crash. The May 2021 Financial Forecast said "evidence of market-peak psychology" in Dogecoin amounted to "a perfect setup for a bet against" the altcoin.

In the May 5, 2021 Crypto Pro Service, Elliott wave experts posted a Special Update on Dogecoin. It evaluated the extreme optimism surrounding the market. The message was clear:

FOMO (Fear of Missing Out) is out of hand as people try to catch up here and jump in because of the huge percentage moves that Dogecoin is making.

We do think a crash in prices is very likely. At its current reading, Dogecoin has entered extreme overbought territory.

As with the Financial Forecast's analysts, Crypto Pro Services' analysts had used Elliott waves to predict massive run-ups in digital currencies prior to the top.

The extreme psychology in DOGE coincided with a mature Elliott wave pattern; namely, a five-wave impulse. The "Crypto Trading Guide: 5 Simple Strategies to Catch the Next Opportunity" report shows this structure:

The market's progression unfolds in waves. ...progress ultimately takes the form of 5 waves...

There are two modes of wave development: motive and corrective. Motive waves have a 5-wave structures, while corrective waves have a 3-wave structure or variation thereof…

In the May 5 Crypto Pro Service, analysts showed a chart of DOGE with a clearly completed five-wave impulse.

Currency Pro Service's Elliott analysts warned that the pattern implied DOGE was primed to fall hard:

When fifth waves crash, the crash is very substantial.

Why We Are Here

Economist Milton Friedman made this prediction about the rise of a universally adopted digital currency:

I think that the Internet is going to be one of the major forces for reducing the role of government. The one thing that's missing, but that will soon be developed, is a reliable e-cash method whereby on the Internet you can transfer funds from A to B without A knowing B or B knowing A.

Friedman made that prediction in 1999. He nailed the reason bitcoin and other cryptocurrencies were later invented.

What he didn't necessarily see was the wild fluctuations in sentiment that came to surround the digital coins.

Before the recent meltdown, mainstream experts extolled cryptos as better than "gold" and said "Bitcoin Is the Only Sound Money" (April 23 Medium).

Again, these comments make a sound point about the utility of bitcoin and other cryptos.

The wisdom of investing in them is another matter entirely. In markets where emotion is such a significant component, Elliott waves are massive -- and fortunes can be made and lost, literally, in a few moments.

Investors have a choice. They can fall victim to the waves of sentiment surrounding the coins. Or, they can use the waves to their advantage -- predicting them, in both directions, and responding objectively.


FREE REPORT: "Crypto Trading Guide"

For Crypto Traders and Just "Crypto-Curious"...

When it debuted in 2009, one Bitcoin was worth ~0.5 a cent. By 2011, it suffered one blow after another, from hacking and theft, and remained currency-non-grata to most of the world.

But the contrarians at Elliott Wave International saw Bitcoin's potential as early as 2012; quote:

"Presuming Bitcoin succeeds as the world's best currency -- and I believe it will -- it should rise many more multiples in value over the years."

Result: What happened next... well, you already know.

The question is, how do you ride Bitcoin's upcoming twists and turns? (And there will be many!)

EWI's free crypto report gives you 5 clear Bitcoin strategies.

Read EWI's "Crypto Trading Guide: 5 Simple Strategies to Catch the Next Opportunity" now.

This article was syndicated by Elliott Wave International and was originally published under the headline Meet SuperMania and its Ever-Present Sidekick, SuperMeltdown. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in