The digital asset market has seen impressive growth during the past seven days, with Fed's FOMC acting as a spot price inflection point, on Wednesday 18th. The surprising rate cut of 50 basis points was positively greeted by investors, leading to a new wave of optimism.
The current technical structure could shift into a Wyckoff accumulation pattern, in which institutional "smart money" investors quietly buy at favorable prices, absorbing selling pressure from weaker market participants.
However, Dow theory could be the instrument of choice for understanding current market mechanisms. In a simplified way, the Dow theory divides market movements into three phases: The accumulation phase, the absorption phase, and the distribution phase. Although the Dow theory was initially used to interpret the stock market, it can also be applied to digital assets.
Applying the Dow theory, bitcoinâs price development over the last couple of years can be divided into accumulation and distribution cycles. The year 2022 represented a clear distribution cycle, bringing bitcoin into a technical inflection point at the turn of 2022-2023.
Bitcoin's realized price (gray) seems to be on a permanent growth angle, rising to $31,722.37. The realized price represents the average cost of all bitcoin purchases, indicating that the majority of bitcoin investors are significantly in profit.
The last year was clearly an accumulation phase (turquoise), which culminated in a distribution cycle in 2024 (red). Once a proper technical support is found, bitcoin moves into a re-accumulation phase (violet), potentially reaching towards six figures.
Written by oinonen_t
