Goldman Sachs Says Bitcoin To Rise $500 More, And Then Lose Half It’s Value
The digital currency is riding a “fifth wave” of an “impulsive” rally that could run as high as $4,827 in the short term, technical analyst Sheba Jafari said in a Sunday report of charts to watch for the week ahead.
However, “once a full five-wave sequence is in place, the market should in theory enter a corrective phase,” she said. “This can last at least one-third of the time it took to complete the preceding advance and retrace at least 38.2 percent of the entire move.”
At the time of the report’s publication, Jafari said that correction could take bitcoin down to around $2,221.
Bitcoin is nearing its target for the “fifth wave” that theoretically leads to a correction
Bitcoin hit a record high of $4,348.23 on Monday, according to CoinDesk, quadrupling in value for the year. That leaves just 11 percent in gains for bitcoin before hitting the high end of Jafari’s forecast.
Already at above $4,300, bitcoin trades well beyond the $4,133 price that Jafari identified as possibly “a level from which to watch for signs of a near-term consolidation.”
Although Jafari didn’t explicitly name it, the five-wave principle of technical analysis is known as the “Elliott Wave.” In July, The Elliott Wave Theorist newsletter also pointed out that bitcoin is “making a final fifth wave from six cents” after predicting the digital currency’s surge seven years ago.
That said, other analysts predict bitcoin can climb into the tens of thousands in the next few years. They expect that growing investor interest in a digital currency with a limited circulation of 21 million coins should naturally drive prices higher.
Bitcoin would also have to fall under $2,935 “to signal that a top is already in place,” Jafari said in the report.
Dramatic price swings of several hundred dollars or more are not uncommon in the digital currency world. In the month after hitting a prior record of $3,025 in mid-June, bitcoin lost more than $1,000, before rallying to all-time highs in the last two weeks.
Analysts attributed the gains to investor optimism about bitcoin after the uneventful bitcoin split on Aug. 1 into bitcoin and bitcoin cash, as well as greater interest from institutional investors.