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21.02.2025 10:52 AM
Wave analysis of BTC/USD on February 21. Bitcoin unwilling to click into gear

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Wave analysis suggests limited upside potential

The 4-hour wave structure for BTC/USD appears clear and well-defined. Following a lengthy and complex a-b-c-d-e corrective structure that formed between March 14 and August 5, a new impulsive wave began to take shape, developing into a five-wave pattern. Judging by the size of the first wave, the fifth wave appears to be cropped. Based on this, I do not expect Bitcoin to rise above $110,000–$115,000 in the coming months.

Additionally, wave 4 consists of three elements, confirming the validity of the current wave count. The news cycle has supported Bitcoin's growth, fueled by ongoing institutional investments from hedge funds, governments, and pension funds. However, Trump's policies could prompt investors to exit the market, and trends cannot always be bullish. The wave that started on January 20 does not resemble an initial impulse wave, suggesting we are dealing with a complex corrective structure that could take months to develop in full.

Bitcoin remains trapped in a narrow range

The BTC/USD price has remained nearly stagnant throughout the week. While minor fluctuations are occurring, this is far from the market activity most traders had hoped for. Bitcoin continues its slow decline toward the wave 4 low.

For the past two weeks, BTC has traded within $93,600–$98,600, corresponding to 23.6% and 50.0% Fibonacci retracement levels from wave 4. Since December 17, Bitcoin has been ranging between $91,400 and $108,300, forming two overlapping sideways channels—further emphasizing the need for a pause in Bitcoin trading.

A breakout from the smaller range could trigger a move toward the peak of the presumed Wave 5, but Bitcoin must first escape this horizontal corridor.

Lack of market drivers keeps BTC in consolidation

Currently, the information environment is weak—not only in the forex market but also in crypto. Bitcoin's major movement occurred in the second half of last year, when the Federal Reserve began aggressively easing monetary policy. Now, the market has already priced in that factor, while Donald Trump's foreign policy seems to have little impact on BTC's price.

Although Trump has announced pro-crypto measures, history suggests that their implementation could take a long time—if they materialize at all. The US President continues to make contradictory statements, and the market is wary of taking his words at face value.

As a result, traders are ignoring Trump's promises regarding crypto industry development and the potential creation of a national Bitcoin reserve. Instead, the Republican leader appears more focused on his own cryptocurrency, TRUMP, than on BTC, reserves, or regulations.

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Conclusion. Is Bitcoin's growth cycle coming to an end?

Based on my wave analysis of Bitcoin, I conclude that its bullish trend is nearing its end—or has already ended. This may not be a popular opinion, but the fifth wave appears shorter than usual. If this assumption holds, Bitcoin is heading for either a sharp drop or a prolonged correction—with the latter being the more likely scenario.

For this reason, I do not recommend buying Bitcoin at this time. If BTC falls below the wave 4 low, it would confirm the transition into a new downward trend phase.

On a higher time frame, we can observe a completed five-wave bullish structure. This suggests that a corrective downward structure or a new bearish trend may soon begin to take shape.

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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