From yesterday’s high at around $179,965,352,747 the evaluation of the cryptocurrency market capitalization has decreased by around 4.5% measured to the lowest point it has been yesterday at around $169B but started increasing again from there and came up to around $176B at its highest today.
As the evaluation made another decrease but on a higher low so far the structure inside which it has been increasing from Friday has stayed intact.
Cryptocurrency Market Analysis
On the hourly chart, you can see that the evaluation’s price action made an ascending structure from Friday as previously an impulsive increase has been seen.
The evaluation came back to the highest point it has been on the ending point of the prior increase on yesterday’s high where it found resistance. The prior high resistance has caused the evaluation to fall back and is currently forming a cluster around the minor horizontal support level with clear signs of struggle indicated by the wicks from both sides.
The wave structure inside the ascending channel looks more corrective then impulsive which is why I believe it was a three-wave ABC correction to the upside after previous ABC to the downside developed and is the second Minuette correctional structure.
As the upward movement inside the ascending channel ended the move to the downside started yesterday when the interaction with the prior high resistance was made, so the current downside movement could be the third consecutive correction which would bring the price below the support level of the ascending channel which we are soon to see as the cluster is being formed prior to a decisive move.
The third ABC correction (not labeled) could have ended on the support level of the ascending channel as I see three waves, but it looks like the third hasn’t developed fully which is why I would expect to see another Minuette downfall below it.
Another possibility would be that the ascending channel has been formed by the 5th wave out of the five-wave impulse to the upside which can be clearly seen on the higher time-frame in which case it would end as a truncation as the 5th wave ended on the 3rd’s vicinity.
Zooming out on to the 4-hour chart of the total capitalization of the cryptocurrency market we can see that the increase seen last week is the 3rd impulse wave according to my count. It is the part of the Y wave from the Intermediate WXY correction that started on the 15th of December last year after the cryptocurrency market has decreased by 54% in its evaluation. The Y wave is a continuation of the first impulse wave to the upside and has started after the correction took place.
The corrective structure we have seen from 24th of December until 7th of February is a three-wave correction that led the market into a decrease to a high low compared to the one made on 15th of December and is considered to be the X wave from the mentioned Intermediate correction.
The upside structure that followed developed in five waves and in time I thought that it was the expected Y wave, but now that we have more historical data I think that it was corrective an a continuation of the X wave as fractals imply in particular as another similar downside movement occurred afterward.
These two additional waves could have been the prolongation of the previous three-wave correction or it could be the start of the Y wave as the 1st Minor impulse wave.
But in either way since the market reached its lower horizontal resistance level from the resistance zone above a retracement would now be expected as the 4th Minor impulse wave should start developing and would most likely be a retracement back to the levels from which the previous impulse move started as an establishment of support is needed for further upside movement.
Zooming out further on to the daily chart, you can see that the evaluation came up to the vicinity of the previous support level which was broken on the way down and is the ending point of the 1st impulse wave out of the C wave of the Primary count.
The currently seen Intermediate correction is the 4th wave correction of the mentioned five-wave move to the downside according to my count so if we see further increase above the $228,156,271,713 the projection would get invalidated as the 4th wave cannot enter the territory of the wave 2 according to the Elliott Wave theory which is why I am considering it as an invalidation level.
As this is the 4th wave from the higher degree impulse the final 5th one is expected to develop after it ends which means that I don’t believe that we have seen the bottom of the bear market like many are praising for currently and are accounting the recently seen exponential increase as the start of the next “bull run”.
The market is likely headed for more downside before we see a bottom which most likely isn’t happening in an instant like many would wish.
More likely the “bottom” will last for two-three months with low volatility and we could expect to see things get pretty boring with many speculators giving up crypto entirely which would leave the people that are finding real utility among the cryptocurrency landscape.