Cryptocurrency News

Bitcoin Drops Below $36K as Centuries-Old Financial Model Predicts Big BTC Crash


Overconfidence Bitcoin (B T cThe bulls will need to contend with more than just Elon Musk because the price forecasting model — created more than 100 years ago by technical analyst pioneer Richard Wyckoff — also goes against his wild upside forecasts.

Dubbed as the Wyckoff method, the model Includes a five-step approach To determine price trends which mainly involve the psychological response of investors to the supply and demand of an asset.

For example, in the case of accumulation, when an asset moves to the downside, the sharp price moves down, the five stages in the sequence are the selling climax (SC), the successful secondary test (ST), the end point of support ( LPS) is included. sign of strength (SOS), and “Stepping Stones” – which refer to higher demand for the asset.

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

The distribution case, on the other hand, appears to be a 180-degree version of the accumulation case, consisting of five phases that follow a strong price movement.

Wyckoff events and phases during delivery. Source: Stockcharts.com

Initial supply (PSY) indicates a strong demand shift as price trends increase along with increasing volume. However, the uptrend eventually ends, leading to a similar buying climax (BC). This follows a sell-off due to lack of demand near the asset’s price stop against abundant supply. Wyckoff called the correction automatic feedback (AR).

PSY, BC and AR together form step A.

Meanwhile, Phase B involves a simulated rebound towards BC, called the Secondary Test (SET), followed by another decline that shows the asset’s weakness signal (SOW). Phase B also typically sees weak rebound attempts from SOW to upthrust (UT). Later, phase C witnesses a terminal shakeout in the transition distribution, known as upthrust after distribution (UTAD).

Phase D involves a dangerous lapse of demand against supply, also known as the end point of supply (LPSY), causing the all and all price crash in Phase E.

Bitcoin in ‘Phase C’

Charming Beef, an independent market analyst, alerted His followers said that bitcoin has entered the accumulation cycle of the classic Wyckoff model. The pseudonymous unit mirrors the recent rally in the bitcoin market, which points to the potential for BTC/USD. $40,000. maintain an uptrend above On weak supply and rising demand.

“Supply is running out. [It] May be ready for Phase C.”

But tempting beef presented a conflicting scenario by reimagining Phase A per Wyckoff distribution schematics. The analyst marked bitcoin’s rally from $30,000-low as a sign of PSY, leading to BC, AR, ST, SOW, and other successive events mentioned in the distribution phase.

There appear to be conflicting Wyckoff scenarios on the bitcoin market outlook for tempting beef. Source: Twitter

Bitcoin again descended into Phase C, which raised concerns about demand exhaustion in the case of Wyckoff distribution events. This would mean that the cryptocurrency’s lowest risk point is the downside – a price crash.

technology slanted downward

Bitcoin’s latest correction in the spot market comes after a year-long rally. Between March 2020 and April 2021, the BTC/USD exchange rate increased by 1,582%, reaching an all-time high near $65,000.

However, the pair wiped out more than 50% of its price rally. Prices crashed, recovered, and they now consolidated sideways without hinting at a specific short-term bias for direction. Therefore, it now appears more like a Wyckoff distribution model, as the phases move upward, not downward, after one year.

Meanwhile, bitcoin is consolidating inside a symmetrical triangle structure after its sharp downside correction since mid-May, indicating that the pattern is indeed one. sign of recession. Technically, the bearish pennant sends prices as low as the scale of the previous move.

Bitcoin Bearish Detection Setup Sees BTC Crash Below $20,000. Source: BTCUSD at TradingView.com

As of the time of this writing, BTC/USD is trading at around $36,000 or 44.59% below its $65,000-top.