The recent rise in the price of Bitcoin (Bitcoin) After the price plummeted below $30,000 this Tuesday, the classic financial model’s bullish outlook for cryptocurrencies was activated.
The model is called the Wyckoff Method and was created by Richard D. Wyckoff in 1888. It attempts to control financial market trends based on the relationship between asset supply and demand. This method has two diagrams: accumulation and distribution.
In the cumulative setting, the asset sends a bottoming signal after the price has fallen sharply. It eventually caused the price to rebound to the upside. At the same time, after a steady price increase, the distribution setup saw assets peak. After that, the price reversed downward.
Each setting has five unique stages. For example, in distribution, the asset undergoes the following events in the above stages (in order): initial supply (PSY), buying climax (BC), automatic response (AR), secondary testing, indication of weakness (SOW), final supply point ( LPSY) and post-distribution upward thrust (UTAD).
At the same time, in the cumulative diagram, the asset records the following events in its five stages (in order): preliminary support (PS), sales climax (SC), automatic assembly (AR), secondary test (ST), and final support point ( LPS) and Symbol of strength.
Wyckoff confirms Bitcoin accumulation
Comparing the recent price movements of Bitcoin with the events shown in the Wyckoff cumulative diagram, it seems that the cryptocurrency is struggling to cope with the final support point of Phase C.
Stage A in the above figure shows that the downward momentum has been exhausted before the level of the secondary test (between 28,800 and 30,000 US dollars) and the sales climax (about 34,000 US dollars). So far, according to the Wyckoff method, supply has dominated.
Driven by institutional demand for Bitcoin and short covering, it is close to an automatic rebound (AR) in phase B. Subsequently, the price repeatedly dropped to the second test, and rebounded after testing the A-phase selling climax level.
Now that the price of Bitcoin has entered stage C, let “smart money” decide whether the cryptocurrency is ready to go higher. If the continuous rebound extends above the SC-ST stage, accompanied by stronger trading volume, then the upward confirmation will come.
Phases D and E reflect a full resumption of operations to USD 60,000.
“This seems to be a possibility,” said Kevin Swenson, a market analyst. “We just achieved a low of $28,800…If this model works, we will now enter the final phase of the recovery.”
In terms of Wyckoff’s method, this low of $28,800 is very similar to the high of $65,000. Both will have the greatest emotional impact on market participants. “
At the same time, Mike McGlone, senior commodity strategist at Bloomberg Intelligence, did not mention the Wyckoff method. famous The repeated bullish rejection of close to $30,000 is similar to the situation that Bitcoin bounced from $4,000 in 2019-2020.
He added: “Selling Bitcoin under good support levels and similar declines means that this year’s close of about $30,000 is not good,” he added, “If the key question this time is whether it’s different , We will see a longer-lasting bull market.”
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