Bitcoin Elliott Wave Analysis Reveals August 2023 as Correction Period, Not a Significant Top

September 5, 2025

Bitcoin Recovery in sight? Analysts Debate Peak and Future Targets

Recent market activity has prompted questions regarding whether Bitcoin has already established its highest point for this cycle. following a pause and subsequent weakening of the rally originating from April’s low,investors are closely monitoring price movements. A detailed examination using the Elliott Wave Principle suggests a potential target range of $164,000 to $216,000 by year-end, with a more optimistic outlook reaching $338,000 to $445,000.

Decoding Bitcoin’s Price Movements with Elliott Wave Theory

The analysis centers on the short-term Elliott Wave count initiated from the April lows. Observations reveal an incomplete sequence of five waves. The initial green W-1 wave peaked at $111,998, followed by a decline to $98,264 in the green W-2 wave. Subsequent peaks at $123,220 (gray W-i) and $124,532 (orange W-b), alongside a low of $111,925 (orange W-a), introduce complexities in interpreting a standard five-wave impulse pattern.

A conventional five-wave structure requires non-overlapping waves. However, the fourth wave ($111,925) marginally overlaps with the first wave ($111,998), violating the principles of impulse wave theory.

Ending Diagonals and the Current Wave Structure

Analysts are considering an alternative interpretation – an ending diagonal (ED). However, EDs typically follow a 3-3-3-3-3 pattern, which does not align with the observed 5-3-5-3-3 structure. the current assessment indicates that Bitcoin is progressing through gray W-iii of green W-3, possibly paving the way for it to reach the projected $164,000 to $216,000 target zone. Historical data from previous cycles demonstrates a strong rally towards thier conclusion-a pattern that hasn’t fully materialized this time.

Did You Know? elliott Wave Theory is a form of technical analysis used to forecast trends in financial markets by identifying repetitive wave patterns.

Technical Indicators support a Potential Reversal

Bitcoin recently bottomed out at the 61.8% retracement level of the June-July gray W-i rally, specifically at $107,271, closely aligning with $107,647. This typical behavior for a second wave, identified as gray W-ii, is a key indicator. The correction from the July high appears as an irregular expanded flat – orange W-a, -b, -c – displaying a 3-3-5 pattern. The downturn from the August high (irregular W-b) clearly featured five waves. If Bitcoin’s price holds above critical support levels, the correction may be considered complete.

Positive Divergence and MACD Signals

Further bolstering the bullish outlook, positive divergence is emerging on technical indicators, while the Moving Average Convergence Divergence (MACD) has reached levels not seen since the notable low in March-April. Additionally, the current three consecutive days of upward movement haven’t occurred since July 11, suggesting an ongoing trend shift.

Bull Warning Level	Percentage of Uptrend Over	Potential Outcome
Blue	25%	Initial Warning
Gray	50%	Moderate Risk of Uptrend Ending
Orange	75%	High Risk of Uptrend Ending
Red	100%	Uptrend From Gray W-ii low Over

Pro Tip: Always use a combination of technical indicators and risk management strategies when trading Bitcoin.

understanding bitcoin Cycles

Bitcoin operates in roughly four-year cycles, characterized by periods of accumulation, bull runs, distribution, and bear markets. Understanding these cycles can provide valuable context for long-term investment strategies. Though, it’s crucial to remember that past performance is not indicative of future results, and market conditions are constantly evolving.

The Elliott Wave Principle, despite its complexity, can be a powerful tool for discerning potential turning points in Bitcoin’s price action. Its application requires a degree of subjective interpretation, and experienced analysts often differ in their wave counts. A diverse range of analytical approaches is always recommended.

Frequently Asked Questions about Bitcoin’s Price

• What is the Elliott Wave Principle? The Elliott Wave Principle is a technical analysis method that attempts to identify recurring patterns in financial markets based on crowd psychology.
• What are ending diagonals in Bitcoin analysis? Ending diagonals are specific wave patterns that frequently enough appear at the end of a trend, signaling a potential reversal.
• What is a 61.8% retracement? A 61.8% retracement represents a common level where price corrections tend to find support or resistance, based on the fibonacci sequence.
• What does MACD divergence indicate? Divergence between price and MACD can suggest a weakening trend and a potential reversal.
• How reliable are these predictions for Bitcoin? While these analyses offer potential insights, all predictions are subject to market volatility and should not be taken as guaranteed outcomes.
• What are the key support levels to watch for Bitcoin? The key support levels to watch are $110,556 (blue), $109,913 (gray), $108,420 (orange), and $107,271 (red).
• What should investors do with this information? Investors should use this information as part of a broader research process, considering their own risk tolerance and investment goals.

Are you optimistic about Bitcoin’s potential for growth,or do you believe a significant correction is imminent? Share your thoughts in the comments below!

What specific Fibonacci retracement levels would a trader watch to confirm the end of Wave 2 and potential entry points for Wave 3, based on the August 2023 price action?

Bitcoin Elliott Wave Analysis Reveals August 2023 as Correction period, Not a Meaningful Top

Understanding Elliott Wave Theory & Bitcoin Price Action

Elliott Wave Theory, developed by Ralph Nelson Elliott, posits that market prices move in specific patterns called “waves.” These patterns reflect the collective psychology of investors.Applying this theory to Bitcoin (BTC) can offer valuable insights into potential future price movements. Many analysts, including myself, believe the price action observed in August 2023 was a corrective phase within a larger bullish trend, not a definitive market top. This analysis hinges on correctly identifying wave structures and understanding the typical characteristics of each wave.

The august 2023 Dip: A Wave 2 Correction?

Looking back at the bitcoin price chart from August 2023, the significant dip appeared to many as a potential bear signal. However,through the lens of Elliott Wave analysis,it aligns more closely with a Wave 2 correction within a larger impulsive Wave 3. Here’s a breakdown:

Wave 1: The initial bullish impulse leading up to the summer of 2023.

Wave 2: The corrective decline experienced in August 2023. Crucially, Wave 2 retracements typically don’t exceed 100% of Wave 1. The August dip, while substantial, generally adhered to this principle.

Wave 3: The anticipated continuation of the bullish trend following the completion of Wave 2. This is often the strongest and longest wave in an impulse sequence.

Wave 4 & 5: subsequent waves completing the five-wave impulse.

The depth and duration of the August correction were influenced by broader crypto market sentiment, macroeconomic factors, and typical Bitcoin volatility. However, the structure itself suggested a temporary pullback rather than a trend reversal.

Key Indicators Supporting the Correction Narrative

Several indicators corroborated the Elliott Wave interpretation of the August 2023 price action.These weren’t isolated signals but rather a confluence of factors:

Fibonacci Retracement Levels: The August low respected key Fibonacci retracement levels associated with Wave 1, suggesting strong support.

Volume Analysis: Volume typically decreases during corrective waves (Wave 2) and increases during impulsive waves (Wave 1 & 3). This pattern was observed during the relevant period.

Relative Strength Index (RSI): The RSI showed oversold conditions during the August dip, indicating a potential buying opportunity. Technical analysis using RSI is a common practise.

Moving Averages: Key moving averages (e.g., 50-day, 200-day) acted as dynamic support levels, reinforcing the bullish outlook.

Alts Performance & Bitcoin Dominance

Interestingly, the forum post from September 5th, 2025, highlights the performance of altcoins (ETH) during this period. The relative strength of altcoins, particularly Ethereum, often signals a healthy crypto market and can occur during Bitcoin corrections. This is because capital rotates from Bitcoin into altcoins seeking higher percentage gains. The post mentions a “sentimental negativity” towards altcoins, which can present buying opportunities for informed investors. A look at Bitcoin dominance during this time would likely show a slight decrease, further supporting the altcoin rotation theory.

The Role of Market Psychology in Elliott Wave Patterns

Understanding the psychological drivers behind each wave is crucial. Wave 2 corrections frequently enough occur as initial euphoria from Wave 1 subsides, and investors begin to take profits. This leads to increased selling pressure and a temporary price decline. However, the underlying bullish sentiment remains intact, setting the stage for Wave 3.

Practical Applications for Traders & Investors

Applying Elliott wave analysis to Bitcoin trading requires patience, discipline, and a willingness to adapt to changing market conditions. Here are some practical tips:

1. Identify Impulsive Waves: Look for five-wave structures moving in the same direction.
2. Confirm Corrective Waves: Identify three-wave structures moving against the main trend.
3. use Fibonacci Tools: Employ Fibonacci retracement and extension levels to identify potential support and resistance areas.
4. Combine with Other Indicators: Don’t rely solely on elliott Wave analysis. Integrate it with other technical indicators like RSI, MACD, and volume analysis.
5. Manage Risk: Always use stop-loss orders to protect your capital.

Case Study: Applying the Analysis in Real-Time (August 2023)

During August 2023, a conservative approach would have been to:

* Avoid shorting Bitcoin: Given the potential for a Wave