As a century-old financial model predicted the Bitcoin crash, Bitcoin fell below $36,000


Overconfident Bitcoin (Bitcoin) Not only do the bulls need to fight Elon Musk, because the price prediction model—created more than 100 years ago by the pioneering technical analyst Richard Wyckoff—is also crazy with them. Upside forecasts run counter to.

The model is called the Wyckoff method A five-stage approach Determine price trends that primarily involve investors’ psychological responses to asset supply and demand.

For example, in the case of accumulation, when an asset tends to bottom after a sharp decline in price, the five stages in turn include selling climax (SC), successful secondary test (ST), last support point (LPS), Symbol of strength (SOS) and “stepping stones”-this means more demand for assets.

Wyckoff events and phases during the accumulation period. Source: Stockcharts.com

On the other hand, the Distribution case looks like a 180-degree version of the Accumulation case, consisting of five phases that follow a strong price trend upward.

Wyckoff events and stages during the distribution. Source: Stockcharts.com

Preliminary Supply (PSY) shows that as the price trend increases and sales volume increases, strong demand shifts upward. However, the upward trend will eventually be exhausted, leading to even the so-called buying climax (BC). Prior to this, due to sufficient supply, there was a lack of demand near the asset price stop loss, leading to selling. Wyckoff refers to this correction as automatic response (AR).

PSY, BC and AR together constitute the A stage.

At the same time, stage B involves a false rebound to BC, called a second test (SET), followed by another drop, showing the weakness of the asset (SOW). In phase B, there is usually a weak rebound from SOW to Upthrust (UT). Later, the transition to Phase C witnessed the final shock of distribution, called Post-Distribution Ascent (UTAD).

Stage D involves an astonishing imbalance between supply and demand, also known as the point of last supply (LPSY), leading to a complete price collapse in stage E.

Bitcoin in “C Phase”

Independent market analysts tempting beef, be warned His followers believe that Bitcoin has entered the accumulation cycle of the classic Wyckoff model.The anonymous entity has recently rebounded in the Bitcoin market, worryingly pointing to the potential of BTC/USD Maintain a bullish trend above $40,000 Regarding weakening supply and rising demand.

“Supply is running out. [It] You can prepare for phase C. “

But Tempting Beef proposed a contradictory scenario by reimagining Phase A based on the Wyckoff distribution diagram. The analyst marked Bitcoin’s rebound from a low of $30,000 as a sign of PSY, leading to BC, AR, ST, SOW, and other consecutive events mentioned in the distribution phase.

A conflicting Wyckoff scenario appeared in Tempting Beef’s Bitcoin market outlook.Source: Twitter

Bitcoin once again entered the C stage, which was shocked by the exhaustion of demand during the Wyckoff distribution event. This means that the point with the least risk of cryptocurrency is the downside-the price collapse.

The technical side is down

After a year-long rally, Bitcoin’s latest correction in the spot market has surfaced. Between March 2020 and April 2021, the BTC/USD exchange rate soared by 1,582%, reaching a record high of nearly 65,000 USD.

However, the currency pair erased more than 50% of its price increase. Prices plummeted and recovered, and now they are consolidating sideways, without hinting a specific short-term direction. Therefore, it now looks more like a Wyckoff distribution model, because these phases follow a year-long upward movement, rather than a downward movement.

At the same time, Bitcoin has been consolidating within a symmetrical triangle structure after a sharp downward correction after mid-May, implying that the pattern is actually a Bearish pennant. Technically speaking, the bearish pennant causes the price to fall by the same magnitude as the previous fall.

Bitcoin’s bearish pennant setting saw BTC drop below $20,000. Source: BTCUSD on TradingView.com

As of the time of writing, the trading price of BTC/USD is approximately US$36,000, which is 44.59% below its highest point of US$65,000.