Bitcoin completed a 2.5-year long Elliott wave movement when its reached its previous all-time high ($68,990) in November. Since this run-up was so large and unhinged, misguided models and sham projects now must die so the crypto market can heal. This includes:

– the stock-to-flow model – an incorrect predictive model which promoted reckless speculation through 2021.

– Microstrategy – MSTR’s $205 million Bitcoin-backed loan will be subject to a margin call if Bitcoin drops to $21k.

– Meme coins, unprofitable protocols (such as play-to-earn games and NFT profile pictures), and rehypothecation in the DeFi market all need to collapse for the market to heal.

Bitcoin is now in Wave 3 (the most powerful wave) of its long-term corrective phase. Charted differently, Bitcoin is in the Fear / Capitulation zone of the ‘Stages in a bubble’ diagram.

Wave 3 is typically 1.618 the length of Wave 1. When charted, this implies Bitcoin will crash violently to $23.6k. When Wave 3 bottoms, this will not mark the end of the bear market. Rather, the crypto bear market should continue for as long the Fed stays hawkish. (The Fed will eventually turn dovish again in the medium to long-term, possibly during Congressional elections near the end of 2022).

Alongside the Elliott wave prediction, Bitcoin’s Price Cycle Theory states that the asset bleeds 80% after each parabolic run-up. In accordance with how bubbles typically break, Bitcoin should dip violently below its baseline growth rate sometime in the next few months.

Unlike the stock-flow-model, Bitcoin’s true growth rate is identifiable through the 200 week simple moving average and through the Logarithmic growth curves

Accordingly, Bitcoin should eventually drop to its baseline growth curve, located near $23k – $21k, to complete its Wave 3 impulsive movement. Then Bitcoin can rebound, then reach ‘Despair’ by sinking significantly lower than its baseline growth. If Bitcoin is set to fulfill its -80% drawdown Price Cycle prophecy, then it will bottom near $13k.

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