22:07The Wyckoff Accumulation: Why Is Bitcoin at a Critical Level According to the Model?
In the chart below, BTC’s price fell to as low as 31,000, but with less volume than the previous nosedives, which is a positive signal and can indicate early signs of supply exhaustion. The price then rallies back up to continue the trading range.
Phase C – Spring and Test
Usually, the traders will briefly drive prices below the trading range and send them back up as they start buying substantial supply amounts.
During the Spring, the price falls, but not as much as the Selling Climax (phase A). More importantly, volume spikes, showing that large players are heavily accumulating and absorbing supply.
After forming the Test at $30,100, BTC spiked further north to make a short-term Higher High at $36,600 (June 29th). The cryptocurrency then saw a short-term pullback and formed a Higher Low at $32,700 (July 1st-2nd). This pullback was followed by less aggregated volume, signaling supply exhaustion.
At the time of writing, according to the definition of each Wyckoff Phase and Principles explained, BTC appears to be in the latter half of Phase C.
This is a critical point in BTC’s consolidation as the price must hold support at $30.1K, the low of the Test.
Phase D and E
The signal is declining volume throughout the trading range and particularly decreasing volume with each pullback. If BTC can push above $36,600, then the current structure will require BTC to rally up to $40,000 and then have a short-term pullback to form the Last Point of Support. After that, it will start another strong rally aiming at $43,000, consolidate, and then go significantly higher.
Risks and How this Structure can be Invalidated
If BTC makes a daily close below the near-term higher low at $32,700, the short-term downside risk will increase. The current Test at $30,100 from June 26th is the critical level to watch.
A Higher Low, in this case, is defined as a pullback to any level above $30,100. Some view the recent sell-off to $28,800 (June 22nd) as the Secondary Test in Phase B, which is possible, but it will require BTC to drop below $28,800 to validate that call.
Bullish Technicals and On-chain
This makes the perfect setup favorable for a breakout to the upside. Notably, on-chain metrics remain very bullish, showing strong net outflows from exchanges.
The latter indicates substantial accumulation by long-term holders, low funding rate, low stablecoin supply ratio, increasing open interest, and robust network user growth.
On-chain analysis has also confirmed an uptick in BTC whale activity, with an increase of 60,000 BTC purchased in one day to start July. These are all positive signals for BTC.
If BTC fails to hold the Higher Low at $32,700, the risk of an extension of the Wyckoff Accumulation and lower prices will increase. With bullish technicals, bullish on-chain analysis, and price action accurately following the Wyckoff Accumulation, the probabilities favor the bulls.
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