Our weekly crypto derivatives analytics report delves into macro events; the current state of crypto and trading signals from spot trading volume; and futures, options and perpetual contracts.

In the past week, cryptocurrencies have surged as optimism grows that the US-China trade war may be easing. Following two days of talks, the US announced a 90-day tariff reduction on Chinese goods from 145% to 30%. ETH has been the biggest winner among the top 10 tokens, rising 40% in a week, though this has led to significant changes in implied volatility. BTC regained $100K for the first time since early February, with positive bias in OTM call skews, but its volatility market remains weak compared to ETH.

Please check out the report’s highlights.

Open interest for ETH surged by $900M over the past week, coinciding with a 40% rise in its spot price. This increase followed US-China trade negotiations, leading to a temporary 30% tariff reduction on Chinese goods. On May 12, 2025, after US Secretary of the Treasury Scott Bessent confirmed the agreement, open interest and perpetual trading volumes hit monthly highs of $9B and $23B, respectively. While open interest has stabilized, trading volumes declined after peaking during a brief pause in the crypto rally between May 11 and 12, 2025.

BTC volatility smiles suggest risk-on sentiment

Despite low short-term volatility expectations, BTC's short-tenor smiles indicate a continued risk-on sentiment, with a 5% skew toward out-of-the-money calls. Early in the week, put option volume surpassed $200M, outpacing $140M for calls, while open interest remains higher for puts than calls.

ETH has outperformed BTC for the second consecutive week, achieving a remarkable 59% return over the past month. This rally came with volatility: ETH's front-end volatility briefly doubled BTC’s 7-day tenor, leading to an inverted term structure. By Monday, ETH had pulled back some gains, causing front-end volatility to drop swiftly, a faster resolution than seen in previous inversions.

However, another rise in spot price toward $2.6K reignited volatility expectations. Open interest and options trading for ETH remain skewed toward calls, with volumes exceeding $150M on May 13, 2025, coinciding with a second price surge after a brief retreat on May 12, 2025.

Advanced

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Bybit X Block Scholes crypto derivatives analytics report (May 14, 2025): BTC volatility remains weak relative to ETH

Strategic Bitcoin reserve (SBR): Established on March 6, 2025, integrating Bitcoin into national reserves

Strategic Bitcoin reserve hopes are all the rage

On March 6, 2025, US President Donald Trump signed an executive order to establish the nation's first strategic Bitcoin reserve (SBR). This pivotal initiative positions Bitcoin alongside traditional reserves like gold and oil, signaling a significant endorsement of digital assets by the federal government. The SBR aims to centralize and manage all Bitcoin acquired through legal forfeitures, ensuring these assets serve as long-term strategic holdings rather than being sold off.

The creation of the SBR reflects Trump's broader vision of making the US a global leader in cryptocurrency. By integrating Bitcoin into national reserves, the administration seeks to harness the benefits of digital currencies while providing a hedge against economic turbulence. This strategic move has also spurred state-level policies, as seen in New Hampshire, where legislation was recently passed allowing state investments in cryptocurrencies and precious metals. Such developments indicate a growing trend of governmental adoption of digital assets, reinforcing the legitimacy of cryptocurrencies in the financial landscape.

Institutional accumulation drives down Bitcoin availability

In the private sector, institutional investors are increasingly accumulating Bitcoin. Companies like Strategy (formerly MicroStrategy) have expanded their holdings significantly, purchasing an additional 13,390 BTC for $1.34 billion, which brings their total to 568,840 BTC. Similarly, Metaplanet Inc. invested $126 million to acquire 1,241 BTC, surpassing the national Bitcoin holdings of some countries. This trend highlights a shift in Bitcoin ownership, with retail investors often taking profits during market rallies, leading to a redistribution of Bitcoin toward institutional entities.

As of May 13, 2025, over 19.86 million BTC have been mined. Wallets holding at least 100 BTC account for 60.84% of the total supply, while those with 10 or more BTC control 82.51%. With Bitcoin's price once again having surpassed $100K, it becomes evident that only about 17.5% of Bitcoin is held by wallets with less than $1 million in BTC. This concentration of ownership raises concerns about market accessibility for smaller investors.

The 10–100 BTC tier is primarily composed of small institutional investors, while wallets with over 100 BTC are predominantly held by institutions and liquidity providers. This oligarchic trend suggests that as cryptocurrency market caps rise, retail traders may feel pressured to sell during downturns, further consolidating wealth among larger holders. Notably, the increasing costs associated with 

, such as electricity and equipment, compel many miners — often retail investors — to sell portions of their holdings to cover expenses, exacerbating this trend.

Bitcoin concentration leaves smaller investors at disadvantage

The establishment of the SBR represents a critical milestone in the integration of digital assets into national financial strategies, positioning the US at the forefront of the cryptocurrency revolution. As of mid-May 2025, Bitcoin's price has fluctuated between $102K and $105K, maintaining an optimistic long-term outlook despite short-term volatility. Continued institutional interest, bolstered by supportive governmental policies, enhances the legitimacy and stability of Bitcoin as an asset class.

However, as smaller investors continue to sell during market rallies, larger wallets are increasingly accumulating supply, tightening their grip on the market. Currently, over 80% of Bitcoin's supply is held in wallets containing $1 million or more in BTC. This trend suggests that while individual portfolios may grow, retail investors could find themselves at a disadvantage in an increasingly concentrated market.

In conclusion, the strategic Bitcoin reserve and the surge in institutional investments signal a positive shift for Bitcoin's legitimacy and its role in the global financial system. However, the growing disparity in Bitcoin ownership underscores the need for retail investors to navigate the market carefully. As these dynamics evolve, awareness of trends in institutional accumulation and wealth concentration will be crucial for all participants in the cryptocurrency ecosystem.

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Bybit x Santiment social sentiment report: Bitcoin reserve hopes leave Bitcoin holdings more concentrated

The Smart Copy Mode is a simple-to-use copy trading feature on Bybit that lets you reap profits from the crypto market even without prior trading experience.

Trading cryptocurrencies can be a lucrative way to earn from the ever-volatile crypto market. However, most people shy away from it due to the intense 

Thankfully, the world of trading now has helpful tools that have simplified crypto trading and made it easier even for beginners to make money from price movements.

First launched as part of a major upgrade in early 2023, Smart Copy Mode offers a simplified way to follow experienced traders known as Master Traders and automatically mirror their strategies. Today, it's one of the easiest and most intuitive ways for anyone, even beginning traders, to tap into the expertise of top-performing traders on Bybit and earn profits.

In this article, we’ll explore how Bybit Smart Copy Mode works and how you can safely make profits as a 

Smart Copy Mode is a simple-to-use copy trading feature on Bybit that lets you reap profits from the crypto market even without prior trading experience.

 Smart Copy Mode is part of the three major upgrades to the Bybit Copy Trading platform 

As of 2025, it remains one of the simplest and safest ways for users to realize returns from automatically mimicking successful Master Traders on the platform.

The Smart Copy Mode requires only three steps to follow a 

 and start earning. All you’ll need to do is enter an investment amount (minimum 100 USDT), select a Bybit account to transfer the funds from and click the 

The entire process is optimized for ease and risk control, making it ideal for anyone looking to trade without micromanaging their positions.

Here are some key features of the Bybit Smart Copy Mode that make it easier to trade while minimizing risks:

Rather than blindly copying a Master Trader’s full position size, Smart Copy Mode calculates a ratio based on both your balance and the Master Trader’s, helping you manage exposure proportionally.

Case in point: Let’s say a Master Trader has 10 BTC in their account but they enter a long position with only 1 BTC. In typical copy trading, a Follower who has 1 BTC in their account will automatically copy the trade with the whole 1 BTC, which exposes their entire portfolio.

However, with the Smart Copy Mode, a ratio calculated based on the available balances in the Follower’s and the Master Trader’s accounts will be exposed for copy trading. In this case, if the ratio is calculated to be 10%, the Follower’s copy trade amount will be 0.1 BTC instead of their full balance of 1 BTC. 

This proportional sizing is especially useful for beginners who may not want to expose their entire portfolio to a single trade.

Another amazing feature of the Smart Copy Mode is the Bybit CopyGuard which is designed to limit losses by adding an extra layer of protection for Followers. While most Master Traders strive to consistently implement successful trading strategies, it’s not uncommon to find some trades that will incur losses.

In such instances as a copy trader, you will incur losses similar to the Master Trader. That’s where the Bybit CopyGuard feature comes in handy.

With CopyGuard turned on, all of the Follower’s trades are optimized in the sense that the entry will always be at an optimal price not worse than that of the Master Trader. If an optimal price is not attained, the trade won’t be copied. However, note that at the point of trade execution, 

 may occur, causing small price discrepancies. However, CopyGuard filters out major price differences that could lead to instant losses. 

To give Followers even greater control over their risk exposure, Bybit now offers a Trailing Stop feature within Smart Copy Mode.

This tool automatically adjusts your exit point based on your account’s highest recorded equity. You simply set a retracement percentage (e.g., 20%), and if your equity drops by that percentage from its peak, all positions will be closed, locking in profits and limiting potential losses. 

Let’s say your account equity fluctuates as follows: 500, 450, 600, 900, 800, 1,000, 800. With a 20% retracement rate, the trailing exit equity adjusts accordingly: 400, 400, 480, 720, 720, 800, 800. When your actual equity drops to 800, the trailing stop triggers and your copy trading positions are automatically closed. 

, the final equity upon exit may differ slightly from the calculated exit equity.

The Trailing Stop feature is especially useful for volatile markets, helping you secure gains without manually monitoring every trade.

Together, Bybit’s copy by ratio, CopyGuard and Trailing Stop features work together to ensure that Followers have an extra layer of protection against losses when engaging in copy trading. 

Smart Copy Mode vs. Advanced Copy Mode: Which is better?

 allow you to choose between the Smart Copy Mode or the Advanced Copy Mode. While both provide an avenue for you to successfully copy a Master Trader’s strategy, there are several differences between the two that may make you opt for one over another. They are:

From the above comparison, it’s highly recommended to go for the Smart Copy Mode if you are a beginner to crypto or copy trading since it provides you with loss-limiting features before you learn your way around the field. For advanced traders, you can go for the Bybit Advanced Copy Mode or stick to the Smart Copy Mode.

Smart Copy Mode has made it easier to realize gains from copy trading.

 Regardless of your status as a beginning or advanced trader, you can have the assurance of a safe trading experience even with margin trading as all the risks are mitigated for you through the Smart Copy Mode.

Compared to the Advanced Copy Mode, the copy by ratio, CopyGuard 

 features within Smart Copy Mode help limit losses through reduced risk exposure. The enhanced automated settings on Smart Copy Mode are sure ways to successfully copy Master Traders without fear of wiping out your account. So, 

Beginner

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Bybit Smart Copy Mode: The way to secure copy trading profits

Invest like a VC with just $20. Common Wealth (WLTH) opens access to early-stage crypto projects through a transparent, community-driven platform.

The traditional venture capitalist (VC) investing model is often elitist and out of reach for many retail investors. While this is particularly the case in the world of traditional finance (TradFi), access to promising early-stage crypto assets is also frequently reserved for larger entities, namely institutional investors and 

. When we hear about a wildly successful crypto project and its token, we often find that its early backers are well-known investment funds or cashed-up VCs. These early investors are the ones who benefit the most from the token’s meteoric rise on the market.

 chain that aims to democratize the way VC investment works in the crypto industry. By using a community-driven approach to sourcing and investing in promising projects, the Common Wealth platform reduces barriers to entry to VC activities. Smaller-scale retail investors, both casual and experienced, are the primary beneficiaries of Common Wealth's unique approach to crypto investment.

Common Wealth has partnered with a network of notable crypto investors who refer high-potential projects to the platform, where these projects are carefully evaluated and qualified to be included in the investment products available to the user community. The entire evaluation process is also driven by community governance procedures, making it transparent and secure. Thanks to Common Wealth, investing in high-potential early-stage crypto opportunities is now open to anyone — even investors who want to start with as little as $20.

 (WLTH) is a decentralized platform that allows anyone to become a crypto VC by using a vetting-based, democratized, community-driven approach to selecting promising cryptocurrency investment opportunities.

The core idea behind the project is to tear down barriers to entry for crypto investment, particularly concerning early-stage promising ventures. Common Wealth has partnered with a group of prominent, savvy crypto investors (referred to as “Oracles”) who refer high-potential crypto investment opportunities to the platform. All the referrals are based on projects or assets that at least one so-called Oracle has personally invested in. As of May 2025, the platform works with ten Oracles, all of whom are notable investors with solid track records and standing in the crypto investment world.

The platform's governance community scrutinizes each referred project via “Oracle Ask Me Anything” (AMA) sessions, proposal workshops and analytics. Community investors then vote to decide on the projects' final eligibility. Any Common Wealth user can invest in qualified projects for as little as $20.

There are two main types of investors on the platform: casual and community members. The former typically invest smaller amounts, and pay with fiat currency using credit or debit cards, greatly simplifying access to the selected projects for users without an affinity for cryptocurrency transactions. Casual investors are normally those who adopt a hands-off approach to crypto investing and tend to start with smaller investment amounts.

Members of the second group, community members, invest larger amounts, or actively participate in the decision-making process for project selection. They’re the core of the governance community on Common Wealth. These investors use cryptocurrency to invest, paying with the 

The Common Wealth project was launched in February 2024 on the Base Layer 2 chain. In May 2025, it debuted its native token, WLTH.

All investment opportunities offered on Common Wealth are in the form of funds that provide exposure to promising projects and assets. For instance, the platform’s Priceless Fund invests in 14 high-potential 

 startup projects, while the Alpha Fund is based on early-stage projects in the areas of artificial intelligence (AI), the 

 (RWAs), decentralized physical infrastructure networks (DePINs) and gaming.

Unlike traditional investment funds, Common Wealth funds are completely permissionless and noncustodial, operating through blockchain smart contracts. As such, no central entity can influence fund management, thus ensuring transparency and discouraging vested interests.

Some funds are based on contributions from the wider user community, and are typically capped funds. There are also perpetual funds, which are funded by the investor community that participates in on-platform governance.

Bundles are Common Wealth funds based on a dynamic mix of assets satisfying certain criteria, e.g., a specific crypto niche. The platform has launched three such bundled products: 

Since the bundles are dynamic, the top five assets may switch according to market sentiment. All allocations within the bundles are equally split between their five assets. For instance, if you invest $100 in a bundle, each of the five assets in it will be allocated $20 of your investment.

The Common Wealth platform charges three types of fees:

When you invest in a Common Wealth fund, you’re issued a 

 (Slice NFT) that denotes your share of capital in the fund. Slice NFTs are freely tradable on the market, investors can quickly access liquidity by selling their Slices. Since these NFTs are fractionalized, you can sell a part of your Slice or the whole of it, per your preference.

Distributed Autonomous Operating System (DAOS)

The Common Wealth Distributed Autonomous Operating System (DAOS) is based on a set of 

 that automate the entire workflow of the platform’s governance processes. Project considerations, analytics related to candidate projects, vote management and other functions related to decentralized governance are handled by the DAOS.

 (DAO) consists of a set of rules and an on-chain community, the Common Wealth DAOS is an entire permissionless system of interoperable autonomous nodes that automates and powers all the platform’s governance elements and procedures.

What is the Common Wealth crypto token (WLTH)?

 asset issued on the Base Layer 2 chain. The token has a wide range of functions on the platform. While investments in Common Wealth are based on the USDC stablecoin, all other key functionalities are enabled via WLTH. These include:

WLTH is a capped asset with a maximum supply of 1 billion. As of mid-May 2025, its total supply stands at around 984 million. The chart below shows the token's supply allocation shares and vesting periods upon its launch in May 2024.

As of May 16, 2025, the WLTH token is trading at $0.003877, which is 98.2% lower than its ATH of $0.2148 on Jul 22, 2024 and 82.8% higher than its ATL of $0.002121 on Apr 18, 2025.

Long-term price forecasts for WLTH are mostly bullish.DigitalCoinPrice 

 of $0.0129 in 2027 and $0.0192 in 2030, whileCoinCodex 

 at around $0.0042 in 2027 but rise to $0.014 in 2030.

VC investment in financial markets remains an exclusive club that isn’t easily accessible to everyday retail investors. In most cases, this applies to the crypto market as well. Common Wealth's value to the broader crypto community lies in designing a system that makes investment in promising web3 initiatives accessible to everyone. The platform's novel model creates an opportunity to involve millions of individuals in the VC game. This could lead to significant growth in overall web3-based VC funding, and positively affect the entire crypto investment landscape over the coming years. Finding a future star in the crypto market with as little as $20 has never been easier — thanks to Common Wealth and the VC tools it provides!

Intermediate

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Common Wealth (WLTH): Invest like a VC — without being one

Trading

Elliott Wave Theory is a technical analysis to look for recurring patterns based on market sentiment to forecast future trends.

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 developed Elliott Wave Theory in the 1930s to describe the market’s behavior. Elliott realized the financial markets moved in repeatable and recognizable patterns that can help forecast key turning points and the next trend. The basis of the complete Elliott Waves cycle is five waves in the direction of the trend, followed by a three-wave countertrend move.

Based on the structure of a trend, crypto traders can use the Elliott Wave principle to determine if a rally is part of a corrective phase or a continuation of the old trend. Depending on the market’s location within the eight-wave cycle, crypto traders can estimate the potential 

 for the end of the second and fourth waves, helping them time their entries.

 by traders who look for recurring patterns based on 

. They use these patterns to analyze market cycles and forecast future trends.

Elliott Wave Theory combines studying the patterns on a price chart with identifying extremes in investor psychology. When the analysis is performed correctly, the primary value of this theory is that it provides a detailed description of how the market behaves. As a result, traders and analysts can make predictions about future price action and investor behavior.

Ralph Nelson Elliott, an accountant, author, and consultant, realized that stock market prices trend and reverse in recognizable patterns. The patterns are repetitive in shape but not necessarily in time or size.

The basis behind his model is that man’s social nature is patterned and is expressed in the financial markets. These patterns are repetitive and have predictive value.

Elliott described the market’s progression as “waves,” or directional trend patterns.

In the image above, we have the basic Elliott Wave pattern. Each mini-trend is called a wave, and the label of that wave is placed at the end of the trend.

The wave that starts at the lower left and progresses higher to “1” is called Wave 1. The following correction is called Wave 2.

A complete cycle will consist of two distinct phases: a phase of progress called “motive,” and a phase of regress called “corrective wave.” The motive waves are labeled with numbers, while the corrective phases are labeled with letters.

Therefore, a complete cycle of motive and corrective trends will consist of eight waves.

Elliott waves the “eight-wave cycle”


This eight-wave cycle is the building block for larger patterns within Elliott Wave Theory.

Elliott went on to describe how these patterns link together to form larger versions of themselves. Essentially, these patterns form the same pattern of the next larger size, producing a structured progression. However, we need to specify which level of the trend we’re referring to when describing the market’s behavior. These levels of the trend are called wave degrees.

Elliott described nine degrees of waves, from the smallest, Subminuette (minutes) to Grand Supercycle (multi-century). The other six degrees of waves were added later when a further study was made. The idea is that the waves of the cycle subdivide into Primary waves, which then subdivide into intermediate waves, and so on. The waves that make up the smaller degree of trend become the building block for the pattern at the next higher wave degree.

These Elliott Wave price cycles appear in all large financial markets with price histories and are present in crypto markets, too.

The emotional and psychological back-and-forth that we witness in cryptocurrency trading makes it a great candidate for Elliott Wave analysis. A trader can spot developing trends for 

, and other cryptocurrencies with a basic knowledge of Elliott Wave and its patterns.

Elliott discovered two distinct phases into which the market enters. Since the market is fractal, these phases will appear on all time frames of charts (i.e., observable patterns repeat themselves in smaller and larger versions). It’s important to note that spotting these phases, the motive and corrective phases, depends on the wave degree you’re viewing. 

The two main phases of the crypto markets are motive and corrective. With a little training, these phases can be relatively easy to spot on a chart.

Any strong directional moves are likely to be motive waves, as their goal is to make progress. Also, motive waves are thought of as 

 inside of them. There are only two patterns that you will find in the motive phase: the impulse wave and diagonal wave.

Of the two motive patterns noted above, the impulse wave is the more commonly spotted pattern. Additionally, within an impulse, Waves 2 and 4 are the corrective waves, having completely different patterns.

There are three basic corrective patterns: zigzag, flat, and triangle. The goal of the corrective patterns is to consolidate the previous trend. Some common features you will find during the corrective phase include:

The flat, triagonal, and zigzag pattern.


It can be difficult to identify each pattern in real-time, so start by simply learning if the market is in a motive phase or corrective phase.

Recall from the wave degree section above that trend waves is labeled with numbers and Roman numerals, while corrective waves are labeled with letters. If you look at an Elliott Wave analyst’s wave count, this is the first distinction you can pick up on that indicates whether the crypto market is within a trend phase or corrective phase.

In the image above, we have a strong trend moving higher in Bitcoin. Each rally is met with a short-term consolidation that is a partial retracement of the rally.

The rally is a five-wave impulse pattern (black labels). Within waves (ii) and (iv) of the impulse, we can find corrective patterns. Wave (ii) is a zigzag pattern, and wave (iv) is a triangle pattern (blue labels).

One of the fantastic elements of Elliott Wave Theory is that the various waves often display a harmonious geometry. With Elliott’s discovery of the market’s behavior, there are a few rules and guidelines the market tends to follow. Some of those guidelines center around the depth of the corrective waves within an impulse.

The two main corrective waves are the second and fourth waves of an impulse. The depth of the correction is different for each of these waves, so it is important to understand this distinction. The 

 tool is an excellent resource to help you quickly identify these levels.

An illustration of the Elliott Wave 2 retracement.


If you believe the first wave of a new trend or impulse has completed, then the second wave must retrace less than 100% of the first wave. However, some guidelines suggest how far the second wave may typically retrace.

Many times, the second wave will retrace about 62% of the first wave. The shallow end of a retracement could be 38%, and the deep end of the retracement is around 78%. The minimum retracement level is generally more than 23%. Therefore, most of the time, you will find Wave 2 retracing about 62% of Wave 1’s length.

Example of Elliott wave 4 retracement pattern.

If you believe the first three waves of the impulse are complete and the market is correcting in a fourth wave, we can estimate where the fourth wave might end. If Wave 3 is longer than Wave 1, then we’ll see Wave 4 retrace about 38% of the length of Wave 3. 

Therefore, if you’re watching a correction unfold, use these ratios mentioned above to help you time entries into the market.

In March 2021, Ethereum began building what we now know is a five-wave impulse pattern. Had a trader been watching this in real-time, they would have recognized a completed impulse subwave and corrective zigzag pattern, which built waves (i) and (ii) in March.

Example of Ethereum’s five-wave impulse pattern.

Wave (i) is a completed impulse wave, followed by wave (ii), a zigzag pattern. The second wave retraces about 62% of the length of wave (i), which is a common corrective size for (ii).

Ethereum then rallies in waves (iii) to new highs. 

Example of Ethereum’s subwaves of the five-wave impulse pattern.

The subwaves of wave (iii) are another five-wave impulse pattern. At this point, we can anticipate a wave (iv) sideways correction. The expectation for a fourth wave correction is to dig into about 38% of the length of the wave (iii).

A triangle is created, the end of it terminating near the 38% correction of wave (iii).

The complete of Ethereum’s a larger Elliott Wave impulse pattern.


From there, Ethereum continues to rally higher in a fifth and final wave to complete the larger Elliott Wave pattern.

Best Entries and Exits Based on the Waves

When viewing the complete eight-wave cycle in its entirety, there are certain portions of the cycle where trades yield a greater reward relative to the risk. These are the waves that traders will want to focus on to initiate trading opportunities.

The best waves to anticipate and trade are the ends of Wave 2, as you would trade Wave 3. Wave 3s tend to be the longest waves, so they offer great reward potential with limited risk.

Additionally, anticipating the end of Wave 4 to trade Wave 5 can yield good returns.

Depending on the wave degree, traders can anticipate the end of Wave 5 and the start of Wave A in a correction. For short-term day traders, Wave A won’t be large enough to make it worthwhile. However, Wave A could have a handsome reward if you’re viewing a weekly chart or larger.

Likewise, if the wave degree is large enough, trading Wave C in a correction could yield a nice reward, too.

Combination of Elliott Wave Analysis with Technical Indicators

To a skilled analyst, the Elliott Wave is useful for identifying the direction of the larger trend and potential price points where the trend might end. For beginning Elliott Wave traders, other technical tools will help you with your analysis.

Elliott Wave and Fibonacci Retracement Levels

Elliott Wave analysis and Fibonacci tools work very well together. The Elliott Wave cycle of eight waves, plus their corresponding five subwaves, are numbers of the Fibonacci number sequence (0, 1, 1, 2, 3, 5, 8, 13, 21, 34 …). Therefore, it is mathematically intuitive that Fibonacci tools are useful in developing an Elliott Wave count and prediction.

The Fibonacci retracement and Fibonacci Extension tools are commonly used when creating an Elliott Wave analysis. Each of the Fibonacci tools serves its purpose, so it’s important to understand how they’re used — or an incorrect analysis might be generated.

First, adjacent waves — like Wave 2’s retracement of Wave 1 — tend to be related to a common Fibonacci retracement level. Additionally, Wave 4 tends to retrace 38% of the length of Wave 3. 

Therefore, an analyst familiar with these guidelines can generate a wave count that can forecast the next likely move.

Beginning Elliott Wave traders often become frustrated since it can feel subjective as to where the wave labels are placed on the chart. The Elliott Wave Oscillator (EWO) was created to help newer traders determine which wave the market may be in.

The EWO generally appears at the bottom of your chart. The highest and lowest values of the oscillator might indicate Wave 3. If the oscillator pulls back to the zero line, then it’s considered Wave 4. Lastly, if the market’s price makes a new extreme but the oscillator does not, that may indicate a fifth and final wave of the sequence.

Above, we can see the most extreme reading might be in Wave 3. The next correction brings the oscillator back near the zero line in a proposed Wave 4. The subsequent lower correction shows a divergence between the oscillator and price to make Wave 5. From there, simply piece together where Waves 1 and 2 might sit.

Elliott Wave analysts who have learned the intricacies of Elliott Wave Theory would suggest it does a good job of describing the context of the market’s behavior. However, traders new to Elliott Wave Theory may pass it off as subjective and not useful. Traders interested in learning and implementing Elliott Wave Theory can research its history and application in numerous articles. Different analytical tools work for a variety of traders.

A stick of dynamite in the hands of a child can be dangerous. However, a stick of dynamite in the hands of a trained professional can create useful tunnels through mountains. The biggest challenge with Elliott Wave Theory is that it takes time and practice to learn how to read the markets. However, if you stick with it, the reward is a description of the market spoken through Elliott Wave that can help you find more consistent trades. 

Elliott Wave Theory is a market analysis method that has been around for nearly 100 years. When correctly implemented, Elliott Wave provides a framework for the mood of the market. It can help traders identify opportunities in the direction of the larger trend.

The reliability of Elliott Wave Theory depends largely on the experience level of the analyst or trader. However, some of the Elliott Wave patterns are easy to identify, helping newer practitioners learn to spot crypto trading opportunities.

How to Use Elliott Wave Theory to Spot Crypto Trend

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How to Use Elliott Wave Theory to Spot Crypto Trend

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