Several crypto experts believe that the phase that Bitcoin price is going through right now is a so-called “Wyckoff Accumulation”.But what exactly is a Wyckoff Accumulation and is it valid?
What is the Wyckoff Method?
The Wyckoff accumulation is a century old form of technical analysis created by Richard D. Wyckoff. It is based on the principles of supply and demand.
According to Wykoff there are two main phases in a market cycle: The accumulation phase and the distribution phase.
The accumulation phase usually follows a big price drop (Phase A) In the accumulation phase the price bottoms out as investors are starting to accumulate share or in this case Bitcoin. The demand and supply are close to even until slowly investors feel more comfortable to buy more and the price rises (Phase D and E in Graph).
The distribution phase can be imagined as the mirrored version of this graph. After a heavy price increase, demand and supply are even and the price stops increasing, over time leading to a larger crash in price.
Wyckoffs method states markets never repeat exact circumstances. So, instead of looking for the market to repeat itself, Wyckoff’s method requires analysts to look at broader sets of patterns. All price patterns vary slightly from previous incarnations either by size or volume to therefore making analysts adopt to different sets of outcomes instead of the same one.
The second rule to the Wyckoff method tells investors and analysts to respect market relativity. Meaning, in order to understand today’s market trend, one must also evaluate the past.
Finally, In the Wyckoff method, Wyckoff introduced three trends. These include up, down, and flat. He also introduced three time frames in his strategy: short term, intermediate, and long term.
Is the Wyckoff Method valid?
According to many experts in the industry, we could soon entering an uptrend in Bitcoin price.
The the chart above which Lark Davis tweeted, one can see that some are theorizing we have ended the bottom trend of Wyckoff Accumulation. And some say that just this week, the low of around 28k which Bitcoin sank to tested support to spring right back up to 33k.
In comment to this, market analysis Kevin Swanson said:
“In terms of the Wyckoff method, this $28.8K lower low is very similar to the $65K higher high. Both cause a maximum emotional effect on market participants.”https://cointelegraph.com/news/bitcoin-bounce-from-28-8k-activates-century-old-financial-model-s-bullish-thesis
Time will soon tell if the Bitcoin bounce off of 28k support this week is the spring to send Bitcoin back to reach it’s previous all time high. Many in crypto are hoping for a bullish reversal of the market come July.
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Aaron is passionate about blockchain and has been an investor in cryptocurrencies for the past years. He enjoys engaging with other people in the cryptocurrency community online, particularly on Telegram, and learning from experts.