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26.02.2025 01:47 PM
Wave analysis of BTC/USD on February 26. Bitcoin falls asleep at $96,000 and wakes up at $88,000

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The wave analysis of the 4-hour BTC/USD chart is quite clear. After a long and complex a-b-c-d-e correction, which unfolded between March 14 and August 5, a new impulse wave began to form, developing into a five-wave structure.

Judging by the size of the first wave, the fifth wave appears to be shortened. Based on this, I did not expect—and still do not expect—Bitcoin to rise above $110,000–$115,000 in the coming months.

Besides, wave 4 consists of three elements, which confirms the accuracy of the current wave count. The news background has been supporting Bitcoin's growth due to a steady influx of institutional investments, including from government entities and pension funds.

However, Trump's policies could drive investors away from the crypto market. So, the flagship crypto may trade without a clear-cut trend indefinitely. The wave that began on January 20 does not resemble a true impulse wave, indicating that we are dealing with a complex corrective structure that could persist for months.

The crash has happened. Will it continue?

Over the past two days, BTC/USD has dropped by $6,500. However, this decline is not as severe as it might seem. Even after the sell-off on Monday and Tuesday, it is too early to confirm the start of a new bearish trend.

At this point, the price has only briefly broken below Wave 4's low. The internal structure of the wave that began on January 20 does not resemble a true impulse wave.

Thus, I lean toward the view that Bitcoin has entered a corrective phase, which could last for an extended period.

It's also important to note that a $20,000 drop from the last peak cannot be classified as a crash or a major correction. Yes, Bitcoin has fallen by $20,000, but before that, it had surged by nearly $100,000. Sharp price swings are an intrinsic feature of Bitcoin, so a $20,000 decline is merely one corrective wave.

Recently, the news backdrop has been relatively weak and was not the driving force behind the latest market downturn. Moreover, the decline was not sudden or drastic.

While I believe the downtrend could extend in the coming days, a full-scale collapse seems unlikely. The internal structure of the first wave in this new trend segment appears complex and unclear, so I am not identifying subwaves within it.

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Key takeaways

Based on my wave analysis of BTC/USD, I conclude that Bitcoin's bullish phase has ended. All signs indicate that a complex correction is underway.

That's why I have previously advised against buying Bitcoin, and now I strongly discourage it.

A drop below the low of wave 4 will confirm that BTC has entered a corrective downtrend. Given this, the best strategy is to look for short-selling opportunities on lower timeframes.

Bitcoin could drop to $83,000 (127.2% Fibonacci level) in the near future. On a higher wave scale, a five-wave bullish structure is visible, suggesting that a corrective downtrend is likely to form soon.

Key principles of my analysis:

  • Wave structures should be simple and clear. Complex patterns are difficult to trade and often change.
  • If you are uncertain about the market trend, it's better to stay out.
  • There is no 100% certainty in price direction. Always use Stop Loss orders to protect your positions.
  • Wave analysis can be combined with other analytical methods and trading strategies for a more comprehensive approach.
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