Bitcoin in the accumulation phase: the Wyckoff method

The Wyckoff method is one of the most used in technical analysis to understand which direction the price of Bitcoin will take.

In these days of uncertainty and strong swings up ($ 40,000) and down ($ 30,000), the Wyckoff method has served to calm traders back. In reality it is a very vast method, which we will try to explain here.

The Wyckoff method

Richard Wyckoff is the one who coined the method that takes his name. Lived between 1800 and 1900, his models have been used as a beacon for market analysis for over a century.

Among the best known parts of the Wyckoff method, the accumulation and distribution phases certainly stand out , interspersed with an uptrend and a downtrend.

Accumulation phase

With the accumulation phase we mean the moment in which the “ composite man ” (that is, an imaginary entity that controls the market and is opposed to retail investors) accumulates assets gradually to prevent the price from rising.

Bullish phase

When it has enough assets, the bullish phase starts, that is, when demand increases, so does the price of the asset. During the uptrend, further accumulation phases can occur.

Distribution phase

At this point the composite man begins with the distribution phase to sell his shares at a higher price than the accumulation one, to investors who are only entering the market at this stage, dragged by the bullish trend and by the increase in prices. .

Bearish trend

When the demand runs out, the downtrend starts, with the supply exceeding the demand and the price falling . When the bearish trend runs out, a new accumulation phase begins.

The accumulation scheme is in turn divided into phases, as is that of distribution.

Bitcoin, what the Wyckoff method suggests

Obviously, the Wyckoff method should not be regarded as a mathematical law. However, some traders suggest that by applying this model the current phase of Bitcoin is an accumulation and this could soon trigger an uptrend.

Certainly yesterday Bitcoin reached levels it had not seen since January , returning below $ 30,000 for the first time At this point it is conceivable that the selling phase and the bearish trend may be over and an accumulation phase is returning, so much so that BTC today earns 7.6% and returns to 34,000 dollars. 

According to the accumulation scheme, in fact, a first strong descent is followed by descents and ascents that alternate up to a collapse at a minimum point followed by a rise higher than the starting price. Bitcoin has been following a similar trend since May. So if this analysis is right Wyckoff tells us that the best is yet to come. 

News Source