Bitcoin (BTC) Price Enters Consolidation Phase, Analyst Warns of 'Overly Bullish Sentiment'

The Bitcoin (BTC) price has recently entered a consolidation phase following significant upward movements, as the cryptocurrency market experiences heightened volatility at the start of the year.

A recent analysis by a market expert, known on social media as Daily Crypto Trading, has applied the Elliott Wave Theory to predict Bitcoin's next price movements.

According to the analysis, the market is likely experiencing a flat corrective wave, with a target in the range of $90,000. The analysis confirms that the recent flat ABC structure held firm at the 89-90k levels, indicating the completion of wave 4.

While the sentiment surrounding Bitcoin's future is "overwhelmingly bullish," this can often serve as a cautionary sign, as highlighted by Daily Crypto Trading.

"Even though wave 4 is done, the sentiment is overly bullish, which is normally a red flag," the analysis notes.

Investors are encouraged to approach the situation with caution, acknowledging that while the analysis is rooted in probability, it does not guarantee outcomes.

The broader macroeconomic landscape is also crucial for understanding Bitcoin's trajectory. Daily Crypto Trading has previously discussed the potential impact of an impending recession, suggesting that macroeconomic factors must be considered before engaging in technical analysis.

The Elliott Wave Theory, which has been notably accurate in previous predictions, is a key component of this analysis. It posits that markets move in predictable waves, and currently, the focus is on the final sub-wave of wave 4.

The expert anticipates that if Bitcoin surpasses the critical level of $109,000, it will confirm the onset of impulsive wave 5, suggesting a bullish continuation.

Should Bitcoin achieve a strong wave 5, projections indicate a potential price increase of 40-50% from the current levels, with Fibonacci extension levels suggesting targets of $113,000, $117,000, and even $121,000.

However, there is a caveat: the wave could be truncated, leading to a double top formation and subsequent corrections, or it may fail to reach a new all-time high (ATH). Thus, surpassing the $109,000 mark is deemed a critical milestone for increasing the likelihood of a blow-off top reaching $120,000.

Conversely, if Bitcoin were to dip back to the $90,000 area, it would indicate the formation of a regular zigzag pattern, implying that wave 4 may not be complete.

As a contingency, an invalidation point has been established at $130,000; a breach of this level could suggest an unforeseen bullish breakout toward a target of $170,000.

At the time of writing, BTC is trading at $104,300, incurring losses of 1.4% over the past 24 hours.