Alessio Rastani interviews Elliott Wave analyst Bob Precht on Bitcoin's long-term downside potential
Alessio Rastani interviews Bob Precht of Elliott Wave International on Bitcoin's chart structure and where prices may be headed.
Summary
Bob Prechter, founder of Elliott Wave International and co-author of Elliott Wave Principle, joins Alessio Rastani to discuss the long-term outlook for Bitcoin. He argues that Bitcoin completed a five-wave bull market at approximately $126,000 and that the current decline — roughly 50% from the top — is only the beginning of a much larger correction. Applying Elliott Wave guidelines, he identifies a potential downside target near the previous wave four of three (approximately $3,000), while acknowledging that a more commonly cited minimum target of around $20,000 corresponds to the prior primary wave four low. He also explains the theoretical foundation of Elliott Wave analysis, rooting it in fractal patterns of social mood rather than external news events or economic fundamentals.
Key Takeaways
FULL TRANSCRIPT
Introduction and Guest Background
Alessio Rastani: Welcome, everyone. We're honored to have our special guest analyst Bob Precht of Elliott Wave International. Bob is, by far in my view, one of the leading experts on technical analysis as well as Elliott Wave theory. He is the author of some of the most important works on finance and technical analysis. In this video, we're going to talk about Bitcoin and specifically the chart you're seeing here. We're going to go through a number of these charts and explain what is likely to happen to Bitcoin over the next several weeks and months, going to the end of 2026, and what Bob thinks about Bitcoin for the long term.
Bob, thanks very much again for the opportunity. I really appreciate this. I'm a great admirer of your work. Guys, if you haven't read Elliott Wave Principle and The Socionomic Theory of Finance, definitely get these books — specifically the second one as well. By far the most important book out there on finance, and I would say generally for understanding markets and charts.
So let's discuss Bitcoin. I think you made a very good call on Bitcoin, Bob. If I'm not mistaken, you wrote me an email some months ago — I think it might have been last year — where you were quite bearish on Bitcoin, and in your newsletter you were pointing out that Bitcoin had much further to go on the downside. You were absolutely correct. Guide us through your thinking on Bitcoin and what you think could happen.
Bitcoin's History and the Elliott Wave Count
Bob Precht: Bitcoin is one of the most interesting investments in history because it's the only one I've ever heard of that went up more than a million times in value. The thing started at a penny. My son is named Elliot and he went to MIT. He worked for Microsoft and then went to work for a hedge fund. He got very interested in Bitcoin early on, and so we were talking about it back in 2010, one year after it was debuted at a penny. It was still selling at 6 cents. He wrote a two-page report saying Bitcoin is a new form of currency, it's got massive potential, it's only 6 cents a coin. If you go on elliotwave.com and click on our Bitcoin button, you'll find the original report that we wrote.
We were excited, and when it got to a dollar we thought that was pretty cool, and $20 was pretty great, and $100 — wow. By the time it got to $20,000 we were like, this is kind of crazy. It's taking over even larger than we imagined. However, even originally, we said, look, if it took over as the world's currency, it would have to encompass or manage all of the transactions in the world. Unfortunately, around that time it began to become clear that the blockchain couldn't really handle the transactions as well as people thought. Now people are trying to fix that. We'll see what happens.
The last time we spoke was October 2024. Bitcoin was nearing $100,000. I told you I thought it was stretched beyond all recognition and I was very negative on it. And you said you thought it was going to go above $100,000 before it topped. I said, okay, I guess we'll see. That was a great call on your part. It did go up there.
What I'd like to do is orient your viewers on the chart I've got to share here. The chart of Bitcoin back in December 2024 — that was shortly after you and I spoke — and I had published what I think is the end of wave five. It actually did edge up a little further, very slowly as you can see on the chart on the right. And finally, I think we made our fifth wave high at about $120,000 plus.
Now, people say, "Oh my gosh, it's down 50%. That's massive." But it's not that big when you look at how far it has come.
Alessio Rastani: For people who may not be familiar with Elliott Wave theory — maybe watching this video for the first time and confused by what you mean by Elliott waves and the five-wave count — according to Elliott Wave theory, markets trend or move in the direction of the major trend in five waves. And once those five waves complete, which is what you're saying here, we see a significant correction, often in three waves, or ABC corrections.
So what you're saying, Bob, is that the fifth wave of the bull market that started on Bitcoin long ago — in 2009, I believe — that bull market has likely finished at the all-time highs we made near $126,000 last year, in the wave five you have there. And the correction we've seen so far from $126,000 — roughly 50% down to around $60,000 — that is just the tip of the iceberg. That is not the end of the bear market. That is not the end of the correction. There's more to go. Am I correct in saying that?
The Downside Potential — How Far Could Bitcoin Fall?
Bob Precht: That's right. Let me show you a perspective on it. This is from February, when I did a special report on the cryptos. I published this last February and I said, look, you have to understand how little it has come down, even though it's been cut in half.
I realized that what had seemed to have happened was that a number of times — a total of nine times — Bitcoin multiplied by six in terms of price. It started out at a penny. We liked it at 6 cents. I realized, based on the high we saw just under $126,000, you can sort of back-calculate to a starting point of 0.01 and a fraction of a cent. And isn't this amazing — it went up six times to this level, six more times to that level, here, here, here, here, and so on. It had gone up by a 6x multiple eight times in eight years. That's a 6x multiple every single year for eight years. That's incredible.
Now, from that point where I've got a parenthesis three — that's intermediate wave three — it only multiplied by six one more time, and it took all of this time to do it. So as you can see, the whole picture, even though this is on log scale, has an arc. And I think that's a rounding, topping process.
So if a normal retracement under Elliott Wave principle minimum would take you back to the previous fourth wave low — in this case we're talking primary — that's around this area.
Alessio Rastani: Yes. That's around $20,000.
Bob Precht: Toward $60,000 now — $60,000, $65,000.
Alessio Rastani: Yes.
Bob Precht: Usually you go back to wave four of three. That's down closer to $3,000.
Alessio Rastani: All right.
Bob Precht: So people say, "Oh my god, that's too far." But as we know, Bitcoin has already had several corrections of 80% plus.
Alessio Rastani: Yes.
Bob Precht: I think the downside potential is very, very large from the point of view of somebody who bought it somewhere in this box —
Alessio Rastani: Which is between $80,000 and $126,000, right? And that's when the money managers got excited, governments got excited —
Bob Precht: Sure.
Alessio Rastani: — individuals got excited. People who bought Bitcoin through funds and things like that have an average buy price of around $89,000, something like that.
Bob Precht: Oh, interesting. So the average person who bought it by that method is well underwater.
Sentiment and the Psychology of a Bear Market Bottom
Alessio Rastani: Yeah. Now, what we look for for a bottom —
Bob Precht: As you well know, is some sort of bottom psychology where people get disgusted, they throw things overboard, they say, "I'll never touch it again." And unfortunately for Bitcoin holders, we are nowhere near that point. In fact, we've had a lot of people come out and say $60,000 is a floor, it's never going to break, it's a great buying opportunity. We'll see about that. I think because people think that's a floor, it's not likely a floor. So I think there's a lot of downside potential in Bitcoin still. But as you say, you and I were there at $100,000 and $120,000. I'm not as vocal right now because we had our say back then.
Alessio Rastani: It's a very interesting point you make there. Thanks, Bob. It's a very powerful and interesting chart. Let's just dig into this. You're saying that typically, after the wave five completes, the ABC correction then typically goes back to the previous wave four — which, at the very first wave four on your chart, is about $20,000. So we can see that right there, the wave four in circle. That's one potential target. Again, for people watching, Bob is not saying we're going to go there immediately in the next few months. This could take some time. Is that correct, Bob? You're saying this could take at least several months?
Bob Precht: We don't — bear markets are like bears. They can look slow and suddenly, you know, they're on top of you.
Alessio Rastani: Sure. Some people may assume wrongly that we're talking about the next few weeks. No, this could take some months. But you're right, Bob — we could potentially reach that level sometime in the next 6 to 12 months.
Bob Precht: You know, it took 16 years to go up. So it's got plenty of time to do a corresponding downside wave of the same degree.
Alessio Rastani: Yeah. I mean, that's way below some of the targets I have mentioned and some people have mentioned, which is $50,000.
Bob Precht: That's why I thought I'd show it to you, because I'm sure most people are thinking that would be insane. But when you go strictly by wave structure — and the wonderful thing about the wave principle, as Elliott points out very often, is it's picture-static. The amount of price and the amount of time are irrelevant. It's all based on form. And we say that — I think that's paragraph one in Elliott Wave Principle that Frost and I wrote back in 1978. It's all about form. So if this is a completed form, it should follow the guidelines of the form.
Elliott Wave Theory Explained — Fractals and Social Mood
Alessio Rastani: I'm glad you brought this up, because there are some people who will comment on videos like this when we talk about Elliott waves and say, "Oh, well, this is just astrology, like reading tea leaves." But the truth is, those people don't realize Elliott waves are based on fractals or fractal geometry, which occurs in nature. You see fractals already out there in nature — like the leaves of a tree, where you get self-similarity, or similar things happening on different scales. The leaves of a tree is a good example, but there are other examples too, like the respiratory system in the body, where you see self-similarity on multiple different scales. And that's essentially what Elliott waves represent — these fractals, where you've got waves within waves within waves.
If you were to explain this to people watching this video for the first time who've never heard of Elliott waves before, what is the most important thing you would convey to them to make them understand?
Bob Precht: I would say human beings in groups are very social animals, and like so much of nature that is shaped by fractals, I think what human beings experience in the social realm is shared moods. Those moods fluctuate, and I believe they fluctuate in a fractal form — and that's the form that R.N. Elliott discovered back in the 1930s. Originally it was applied only to stock price changes, and people were asking, how does that make sense?
What I've done is expanded it, and I've said, look, this is social mood fluctuating. One of the results of increasingly positive social mood is that people tend to bid stocks higher, and when social mood trends negative they tend to bid them lower — but they also do a lot of other things. They start expanding their businesses, for example, when they're feeling better and more optimistic. They want to see certain types of movies — maybe romantic movies, happy films, comedies, ones with heroes — and happier music, such as we heard in the '60s or the '80s. And then when times are going the other direction, when there's a little more pessimism, they're not just bidding stocks down. It's not the only thing people do in life. They do all kinds of other things. They're listening to more morose music, they're watching movies that don't have any heroes in them, and so forth. There are all kinds of social manifestations of these fluctuations in social mood.
The difference between my theory and every economist's theory is that mine is a theory of endogenous, internally regulated shifts in mood, whereas everybody else thinks the market is hit from the outside, like a mechanistic system — interest rate changes, and so people change their minds. My opinion is that is irrelevant. All these fluctuations are natural, and what we see — what you and I are tracking — are the results, not the causes.
Alessio Rastani: You're absolutely correct. A lot of people don't understand this. They think there has to be some mechanistic explanation for why markets move in a specific direction — some news event or some fundamental factor. Whereas what you're saying is, no, markets are driven by human behavior, human psychology, sentiment, social mood as you call it in your books — because human social mood and psychology follows fractal patterns as well. This leaves a mark essentially on the charts, because when people take action, when people buy and sell, their behavior itself leaves patterns, leaves marks, which have a fractal pattern to it. That's what we see on the charts.
News Events and Market Moves — The Academic Evidence
Bob Precht: There have actually been three very comprehensive academic studies about the connection between news events and stock market movements, and all three of them concluded very emphatically that they could not attribute big moves in the market to news. News would come out and the market was unpredictable about what it would do next. Also, the big moves in the market didn't necessarily coincide with news. I talk about those studies in Socionomic Theory of Finance — that book you mentioned — and people ignore it because news is plentiful. News comes out all day long, all week long, all month long, all year long, and the market fluctuates all during this time. Every now and then they coincide and people say, "Oh, that caused it." But it's all the times it doesn't cause it that they're not focusing on, and when you do a study you find that you just can't rely on news.
In fact, I'm much happier when the market moves on no news, or maybe goes down on good news or up on bad news, because it's clear that the psychology is in charge.
Alessio Rastani: Yes, absolutely right.
Short-Term Outlook and the $3,500 Target
Right now, Bitcoin — after its drop — even at current prices seems to be a little bit still oversold. I'm not saying it cannot go lower, even though it's oversold, it can. But do you see a potential for a short-term bounce, maybe back up to $70,000 or $80,000, before it then plunges? Sometimes there's a kind of back-and-fill before the downtrend continues. Do you see that?
Bob Precht: I'm not going to try to call anything short-term because people take it to heart and they might bet on it. But we do have a 24-hour crypto service. If that's your thing, just go to elliotwave.com and click on our crypto button and you'll find what we offer. I've got guys that dedicate their lives to calling the short-term and intermediate-term moves in Bitcoin.
Alessio Rastani: The wave four in parentheses there at $3,500 — do you actually think that in the next few years we could actually see Bitcoin that low? For some people that would be a great thing because they think, okay, it'll be cheaper to buy at $3,500. Some people will see it as a disaster. If people watching this video could type your comments and let me know what you think — would it be a disaster for you, or would it be a great opportunity? Let us know in the comments.
Bob Precht: What we don't know is what the true future of Bitcoin is. And uncertainty is the driving element of financial markets. When people are uncertain, they start betting with their emotional side, not their rational side. And that's why markets fluctuate in Elliott waves — there's always uncertainty.
Now, at the top, there was so much absolute bullish certainty. It was incredible. Even the United States government got behind cryptocurrencies. I don't recall a time that's been a long time since that happened. So it's a very rare thing, and it shows you the extent of the optimism — not only broad but deep.
In one of these earlier corrections — I forget which one, it might have been back in 2014 or 2015 — Chuck Schumer came out and said he wanted to ban Bitcoin or something like that. People got all scared and said, "Oh, the government's going to quash Bitcoin." That's the kind of thinking that gives you a buying opportunity.
Alessio Rastani: Yes. Yes.
Bob Precht: We don't have that here.
Alessio Rastani: Bob, thank you very much for that. I really appreciate it.