Bitcoin: Let's Put 2 Heart-Pounding Price Drops into Perspective

Here's what our "preferred" Elliott wave count said on Feb. 5, 2021

By Elliott Wave International

When financial historians discuss past manias, many of them point to the South Sea Company of the early 1700s as a classic example.

The enthusiasm to buy a piece of the action was so great that even Sir Isaac Newton became in investor.

He, along with many others, eventually lost big time when the South Sea Company Bubble burst.

And, in late January, it looked like the modern-day mania surrounding the cryptocurrency Bitcoin had burst too, at least according to one major financial magazine (Forbes, Jan. 27). Here's the headline:

Bitcoin Has Crashed. Is This The End?

That was in response to Bitcoin's swift slide from near $42,000 to below $30,000. Well, it turned out that this heart-pounding downturn in price was only temporary.

This was no surprise to Elliott Wave International's cryptocurrency analyst Tony Carrion. Indeed, in his video in our monthly Global Market Perspective (a monthly publication which covers 50-plus markets worldwide), he showed this chart and said:

Our preferred [Elliott wave] count is that [Bitcoin] is advancing within the subwaves of a [larger up wave]. … The wave IV (circle green) correction played out for most of January. Wave evidence suggests that the correction ended on Jan. 22.

As you probably know, the cryptocurrency has since climbed as high as $58,000. That high price was hit in the morning of Feb. 22 and was followed by another heart-pounding price drop. As of this writing, the Bitcoin's price has plummeted nearly 13%.

Is this another temporary correction -- or, finally, the start of an all-out collapse?

Now is the time to learn what Elliott wave analysis suggests is next after this most recent price drop.

If you’d like to gain insights into Elliott wave analysis, you can do so by reading the Wall Street classic book, Elliott Wave Principle: Key to Market Behavior, by Frost & Prechter. Here’s a quote:

Despite the fact that many analysts do not treat it as such, the Wave Principle is by all means an objective study, or as Collins put it, “a disciplined form of technical analysis.” Bolton used to say that one of the hardest things he had to learn was to believe what he saw. If you do not believe what you see, you are likely to read into your analysis what you think should be there for some other reasons. At this point, your count becomes subjective and worthless.

Get more insights into the Wave Principle. You see, the online version of this Wall Street classic is available to you free after you join Club EWI, which is the world’s largest Elliott wave educational community. Club EWI membership is also free.

Get the ball rolling by following this link: Elliott Wave Principle: Key to Market Behavior – free and unlimited access.

This article was syndicated by Elliott Wave International and was originally published under the headline Bitcoin: Let's Put 2 Heart-Pounding Price Drops into Perspective. 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.

Why This "Excellent" Stock Market Indicator Should Be on Your Radar Screen Now

"No crowd buys stocks of other countries intelligently"

By Elliott Wave International

Elliott Wave International's 25+ analysts regularly review more than 100+ market indicators to keep subscribers ahead of major turns.

Many of those are "technical" indicators. Others are "sentiment" related.

Let's focus on a key sentiment measure which has a stellar track record. As the book Prechter's Perspective says:

For decades, heavy foreign buying in the U.S. stock market has served as an excellent indicator of major tops.

This indicator also works elsewhere around the globe. For instance, in the late 1980s, after years of indifference, overseas investors became net buyers of Japanese stocks. This occurred right before the zenith of one of the biggest bull markets of all time.

But, getting back to the U.S., the heavy foreign buying (or selling) indicator certainly applied in 2007.

Let's take you back to this chart and commentary from the August 2007 Elliott Wave Financial Forecast, a monthly publication which provides subscribers with analysis of major U.S. financial markets:

This chart of the Dow and foreigners' net purchases of U.S. equities shows how the correlation held for U.S. shares through the bull market of the 1990s. After briefly fleeing the U.S. market in a record net selling month last December, foreigners jumped into the U.S. market like never before in May. The new record was a full third higher than the old one, which was set in February 2000, one month after the Dow Industrials' 2000 peak and one month before the NASDAQ's all-time high. The first five months of [2007] produced what was easily the biggest gusher of net foreign buying in history. The record suggests that falling prices lie directly ahead for the U.S. market.

Well, just two months later, the DJIA topped and then tumbled 54% into March 2009.

The reason for calling your attention to this indicator here in 2021 is that the just-published February 2021 Elliott Wave Financial Forecast provides subscribers with the latest available data on foreign purchases of U.S. shares -- and it's stunning.

The DJIA's Elliott wave structure is also attention-grabbing and very much worth your time to review and ponder.

If you'd like to learn more about the Elliott wave method for analyzing financial markets, you are encouraged to read the Wall Street classic book, Elliott Wave Principle: Key to Market Behavior, by Frost & Prechter. Here's an excerpt:

[T]he Wave Principle often indicates in advance the relative magnitude of the next period of market progress or regress. Living in harmony with those trends can make the difference between success and failure in financial affairs.

If you'd like to access the entire online version of the book for free, all that's required is a Club EWI membership.

Club EWI is the world's largest Elliott wave educational community and is free to join. Members enjoy unlimited and free access to a wealth of Elliott wave resources on financial markets, investing and trading.

The way to get started is to follow this link: Elliott Wave Principle: Key to Market Behavior -- free access.

This article was syndicated by Elliott Wave International and was originally published under the headline Why This "Excellent" Stock Market Indicator Should Be on Your Radar Screen Now. 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.

Gold / Silver: What This "Large Non-Confirmation" May Mean

By Elliott Wave International

When a trend is strong, related markets tend to move in unison.

However, when a trend is near exhaustion -- either bullish or bearish, "non-confirmations" often occur. This is when one market continues to rise (or fall), but a related market does not.

As a case in point, the Feb. 3 U.S. Short Term Update, an Elliott Wave International thrice weekly publication which provides near-term forecasts for major U.S. financial markets, discussed the details of a non-confirmation between the price action of gold and silver. Here's a chart and commentary:

[Silver] plunged nearly 13% in a matter of ten hours from Monday night to Tuesday morning. The sketchy new stories of an impending "short squeeze" for silver prices were bogus. As we showed in Monday's Update, speculators are net-long a third of all open interest in silver, not net-short as some have erroneously reported.... The push to $30.09, Monday night's high, [was a] move not confirmed by gold, creating a large 5½-month non-confirmation. Fractured trends are often unsustainable.

Making portfolio decisions based on "sketchy news stories" can get speculators into hot water.

As Bloomberg reported on Feb. 2:

A single block of $30 June calls in iShares Silver Trust (SLV) sold for $3.4 million on January 28. Yesterday the same block was worth about $1.2 million.

Keeping your eye on a financial market's Elliott wave pattern can help you avoid such financial missteps.

That doesn't mean that the Elliott wave model can foretell the future to a "T," however, here's an insight worth knowing from the Wall Street classic book, Elliott Wave Principle: Key to Market Behavior, by Frost & Prechter:

Although it is the best forecasting tool in existence, the Wave Principle is not primarily a forecasting tool; it is a detailed description of how markets behave. Nevertheless, that description does impart an immense amount of knowledge about the market's position within the behavioral continuum and therefore about its probable ensuing path.

We've already learned that a non-confirmation suggests a trend turn is ahead.

Now, learn how Elliott wave analysis can provide you with even more precision for spotting key junctures in the chart patterns of the financial markets in which you are interested.

You can do so by reading the entirety of the online version of Elliott Wave Principle: Key to Market Behavior for free!

Free access to the book becomes instantly available to you after you join Club EWI, the world’s largest Elliott wave educational community (approximately 350,000 worldwide members).

Don’t worry about the cost of joining because Club EWI membership is 100% free and allows you free access to a treasure trove of Elliott wave insights into financial markets, trading and investing.

Following this link gets you started:

Elliott Wave Principle: Key to Market Behavior– free access.

This article was syndicated by Elliott Wave International and was originally published under the headline Gold / Silver: What This "Large Non-Confirmation" May Mean. 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.

Historic Global Financial Crisis? "Puzzle Pieces" Will Soon Fit into Place

The public debt of this major nation reaches 99.5% of GDP – prepare for what may be next

By Elliott Wave International

A buildup of an unsustainable amount of debt generally precedes devastating deflationary episodes.

The last brush the world had with deflation was the 2007-2009 financial crisis, which was accompanied by a huge amount of bad debt in the mortgage market. That financial crisis was the most severe since the Great Depression of the early 1930s, which itself was preceded by a mountain of unsustainable debt.

As Robert Prechter's Conquer the Crash says:

A high-debt situation becomes unsustainable when the rate of economic growth falls beneath the prevailing rate of interest on money owed and creditors refuse to underwrite the interest payments with more credit.

The signs show that the global financial system may be approaching a tipping point.

The United Kingdom is a case in point. Here's a chart and commentary from the January 2021 Global Market Perspective, an Elliott Wave International monthly publication which provides subscribers with analysis of 50+ markets worldwide:

[In the U.K.], the treasury took on another £31.6 billion in debt in November alone, 40% more than October, while public debt hit almost £2.1 trillion, or 99.5% of GDP, the highest ratio since 1962. Meanwhile, the deficit will widen to about £400 billion in 2020/21, or about 20% of GDP, according to the Office for National Statistics. That represents double the hit caused by the 2008 financial crisis. As we have been describing for most of the year, all of the puzzle pieces for the greatest financial crisis in history will soon be in place.

The U.K. is hardly the only place in the world where debt is reaching an alarming level.

Here's what a Jan. 18 Wall Street Journal article says about the U.S.:

At 100.1% of gross domestic product, debt already exceeds the annual output of the economy, putting the U.S. in company with economies including Greece, Italy and Japan.

This headline is from the Toronto Star on Feb. 1:

Canada's debt-to-GDP ratio is alarming.

The list of nations with troubling amounts of public debt goes on.

The special free report, What You Need to Know Now About Protecting Yourself from Deflation, provides more insights on the potential for a historic financial crisis.

Here's a brief quote:

When social mood shifts, so too do lenders', borrowers' and investors' plans for the future, shifting from expansion to conservation to preservation. Money flow slows and defaults rise. Default and fear of default result in a cascade of debt liquidation known as a deflationary crash or spiral.

Prepare now for what may be just around the corner.

Follow the link to get the insights you need: What You Need to Know Now About Protecting Yourself from Deflation -- free access.

This article was syndicated by Elliott Wave International and was originally published under the headline Historic Global Financial Crisis? "Puzzle Pieces" Will Soon Fit into Place. 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.