Introduction to the Wyckoff Model
The Wyckoff model is a technical analysis method used to predict the price trends of financial assets, including Bitcoin. This model divides the market cycle into four main phases: accumulation, appreciation, distribution, and depreciation. Each phase has specific characteristics and price behavior:
Accumulation: The market is stable at low prices, accumulating buying.
Mark Up: Prices begin to increase sharply when demand exceeds supply.
Distribution: The market reaches its peak, large investors begin to sell.
Mark Down: Price decreases when supply exceeds demand.
Image Analysis
Figure 1: Wyckoff Logic
The first image illustrates the Wyckoff cycle with its accumulation, bullish, distribution, and bearish phases along with corresponding trading volume levels. Key highlights include:
Accumulation: The market accumulates at low prices, with low trading volume.
Mark Up: Price increases sharply with increased trading volume.
Distribution: Price peaked, with high trading volume.
Mark Down: Sharp price declines, often starting after a major sell-off.
Figure 2: Wyckoff Analysis for Bitcoin
The second image applies the Wyckoff model to the Bitcoin price chart. Below is the detailed analysis:
Accumulation phase:
Time: Mid 2022
Characteristics: Bitcoin price is stable at low levels, with low trading volume, consistent with the accumulation phase in the Wyckoff model.
Mark Up:
Time: Late 2022 to mid 2023
Characteristics: Bitcoin price begins to increase sharply, with increased trading volume, reflecting higher demand than supply.
Distribution phase:
Time: Mid to late 2023
Characteristics: Bitcoin price peaked, trading volume was high when large investors started selling. Strong price fluctuations can be seen during this period.
Re-Accumulation phase:
Time: Early 2024
Characteristics: After the distribution phase, Bitcoin price stabilizes at a price lower than the previous peak, but still higher than the initial accumulation phase. Trading volume decreased again, indicating a re-accumulation before a possible price increase again.
BTC is also in the accumulation phase, but many volume indicators have also decreased the buying power of ETF Funds and large investors with long-standing Whale entities who have taken profits before. And the relative strength index (RSI) has also reached an overbought limit indicating a future reversal from the higher 90s when BTC broke its ATH at 73k after which subsequent price levels began. decreased compared to the previous price level and RSI similarly entered the correction phase below level 80 and the current level is 61 on frame D1 and 71 on frame W.
This reversal will lead to the price reversing from overbought to redistributing lower prices to consolidate demand at the previous price levels of 50k - 52k and then accumulate momentum if Demand is large but Supply is high. If the price is low, the price will likely increase in the future and vice versa.
Future Forecasting
Present (May 2024)
Currently, Bitcoin price fluctuates around $66,000, following a period of re-accumulation as described in the Wyckoff analysis. Key factors influencing current prices include:
Trading and investment activity: Bitcoin is in a re-accumulation phase, with the participation of long-term investors.
Global economic situation: Macroeconomic factors such as inflation, monetary policies of central banks, and major economic events can affect investor sentiment.
Technological developments and widespread acceptance: Technological advancements and growing acceptance of Bitcoin and other digital assets in both traditional financial markets and other industries.
Future (next 6-12 months)
Short Term (next 6 months)
Mark Up phase: According to the Wyckoff model, Bitcoin is likely to enter the mark up phase after the re-accumulation phase. The price could rise to $80,000-90,000 if it breaks the current resistance and trading volume increases.
Economic and policy events: Monetary policies and major economic events such as Fed interest rates or economic stimulus measures can create buying or selling pressure.
Mid-Term (next 12 months)
Distribution phase: After the price increase phase, Bitcoin may enter the distribution phase, the price may fluctuate around a new peak (80,000-90,000 USD) before large investors begin to sell.
Trading volume and market news: High trading volume and positive news about Bitcoin adoption can push the price to higher levels, while negative news can push the price down.
Long Term (After 12 months)
Mark Down Phase: According to the Wyckoff cycle, after the distribution phase, Bitcoin may enter the bearish phase. Prices could drop to $50,000-60,000 or lower, depending on the extent of the sell-off and market sentiment.
Technical and fundamental factors: Technical factors (such as key support and resistance levels) and fundamental factors (such as government adoption and regulation) will play an important role. important in determining the long-term price of Bitcoin.
Here are some predictions:
According to Binance, Bitcoin price could increase 5% and reach $67,452.41 in the next 30 days1. They also predict that BTC price could increase to $90,030.91 by 20301.
An article from LiteFinance says Bitcoin could trade at around $80,000 after April 2024 and could reach $120,000 by the end of the year2.
Another prediction from vstar.com suggests that Bitcoin price could reach $72,500 by 20243.
CoinShares research director James Butterfill predicts Bitcoin price could rise to $80,000 by 20244.
Trader Alan Tardigrade predicts Bitcoin could hit $130,000 before 2024 ends
Conclude
The Wyckoff model provides a useful analytical framework for predicting the price trend of Bitcoin based on the accumulation, bullish, distribution, and bearish phases.
Currently, Bitcoin may be in a re-accumulation phase before entering its next bullish phase, but investors should monitor other market factors for confirmation of this trend.
According to current analysis, Bitcoin is likely to enter a bullish phase in the short term before entering a distribution and bearish phase in the medium to long term.
All comments are personal opinions, so this is not investment advice, so everyone should carefully consider factors as well as finances to invest according to their personal taste and method.
