Bullish on Bitcoin: At Critical Juncture
2025-01-17
Category: None

Bitcoin is currently at a critical juncture, facing channel resistance and hidden bearish divergence on the On-Balance Volume (OBV) indicator. For this bearish signal to be invalidated, the price must break above $102,727. However, buyers have not shown strong support at the current levels, which is essential for a breakout. Without a decisive push from buyers, breaking through this resistance level remains uncertain.

 Bullish Momentum  

Despite the challenges, I remain fairly bullish on Bitcoin’s outlook. Every dip is being aggressively bought, as evidenced by the swift recovery from the $90,000 drop, which was absorbed in just two days. This robust buy-up indicates strong bullish momentum and significant interest from market participants.

 Understanding Bearish Sentiment 

While I maintain a bullish stance, I understand why some traders expect lower prices. Key factors contributing to this sentiment include:

 CME Gaps:  These gaps are often filled, leading some to anticipate a return to lower levels.

 Fibonacci Retracement:  Price has not retraced to the 0.386 Fib level, which is commonly the minimum retracement for a Wave 4 correction in Elliott Wave Theory.

 Wave 4 Correction:  According to Elliott Wave Theory, if a Wave 4 correction hasn’t fully played out, the price needs to break the high of Wave 3 ($108,353) to confirm the end of Wave 4. Until this occurs, the possibility of an incomplete correction remains a consideration.

 Bullish Case for Bitcoin 

In the bullish scenario, the recent correction can be classified as a WXY correction, with Wave Y ending at $89,256. Wave C was truncated, meaning it did not fully extend, leading to a shorter-than-expected correction. This suggests that Bitcoin has transitioned into Wave 5, its final upward impulse.

 Why Wave 5 Matters 

Wave 5 is particularly significant as it often coincides with the peak of Bitcoin’s rally and the beginning of Alt Season. Historically, this phase sees strong price action, with dips being short-lived and quickly absorbed by buyers.

 Alts Rally with Bitcoins Wave 5 
As you have seen XRP’s recent breakout means its now technically in its bullish Wave 3 lends further credibility to the bullish case. If Bitcoin were to experience further downside, it could drag XRP down, potentially invalidating its wave count. This scenario seems unlikely, given XRP’s strong momentum.

 Market Catalysts
 
It seems plausible that Bullish Momentum will rally into the inauguration of Donald Trump.

 Conclusion 
Bitcoin’s current price action suggests a strong bullish momentum despite some underlying bearish signals. While caution is warranted due to the hidden OBV divergence and incomplete retracement patterns, the aggressive dip-buying and transition into Wave 5 paint an optimistic picture. The key levels to watch are $102,727 for invalidating bearish signals and $108,353 for confirming the end of Wave 4. For now, the dips are opportunities, and the path forward looks promising for Bitcoin and the broader crypto market.