Bitcoin bounce from $28.8K activates century-old financial model's bullish thesis

A recent upswing in the price of Bitcoin (BTC) following a nail-biting price crash below $30,000 this Tuesday has activated a classic financial model’s bullish outlook on the cryptocurrency.Called the Wyckoff method — created by Richard Wyckoff in 1888 — the model attempts to navigate financial market trends based on the relationship between the supply and demand of assets. The method has two measurements: accumulation and distribution. In an Accumulation setup, an asset signals bottoming out following a sharper price decline. It eventually leads to the price rebounding to the upside. Meanwhile, the Distribution setup sees the asset topping out after a solid price moves uphill. After that, the price reverses direction to the downside. Each setup has five unique phases. For example, in Distribution, an asset goes through the following events across the said phases (in order): Preliminary Supply (PSY), Buying Climax (BC), Automatic Reaction (AR), Secondary Test, Sign of Weakness (SOW), Last Point of Supply (LPSY), and Upthrust After Distribution (UTAD).Wyckoff events and phases during distributionMeanwhile, in the Accumulation schematic, an asset logs the following events across its five phases (in order): Preliminary support (PS), Selling Climax (SC), Automatic Rally (AR), Secondary Test (ST), Last Point of Support (LPS), and Sign of Strength.Wyckoff events and phases during accumulation Wyckoff confirms Bitcoin accumulationComparing the Bitcoin recent price action and the events presented in the Wyckoff Accumulation schematic, it appears the cryptocurrency is grappling with its Last Point of Support of Phase C.Bitcoin phases imagined per Wyckoff Accumulation Schematic. Source: TradingView.comPhase A in the chart above shows exhaustion in the previous downside momentum at the Secondary Test (between $28.8K and $30K) and Selling Climax (approx $34K) levels. Up to this point, the supply was dominant as per the Wyckoff Method. An automatic rally (AR) approached in Phase B, led by both institutional demand for Bitcoin and short-covering. Later, the price repeatedly dipped towards secondary tests and bounced back after testing the Selling Climax horizontal line from Phase A.Now, the Bitcoin price has entered Phase C, leaving it to the “smart money” to decide whether the cryptocurrency is ready to go higher. An upside confirmation would come if the ongoing rebound extends above the SC-ST phase, accompanied by stronger volumes.Phase D and Phase E reflect an all-and-all recovery run towards $60,000.”It seems like a possibility,” said market analyst Kevin Swenson. “We just got the lower low at $28.8K … If this model plays out, we will now enter the final phase of the recovery back up.”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.”Meanwhile, Bloomberg Intelligence’s senior commodity strategist, Mike McGlone, albeit not referring to the Wyckoff Method, noted that repeated bullish rejections near $30,000 are similar to how Bitcoin bounced from $4,000 in 2019-2020.Bitcoin bulls show resilience at $30,000. Source: Bloomberg Intelligence”Selling Bitcoin around good support & similar dips below most means as about $30K this year hasn’t ended well,” he added, “and if the key question this time around is whether it’s different, we see a more-enduring bull market.”The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Bitcoin holds $34K as Bloomberg likens $30K support to $4K in 2020 BTC price crash

Bitcoin (BTC) maintained $34,000 support on Wednesday as a rebound from six-month lows showed surprising resilience.BTC/USD 1-hour candle chart (Bitstamp). Source: TradingViewBitcoin bulls see 2020 similaritiesData from Cointelegraph Markets Pro and TradingView showed BTC/USD stabilizing on Wednesday after a day of unnerving volatility.At the time of writing, Bitcoin was approaching $34,500 on the back of daily gains, which topped 15%.While the latest price action did not convince everyone that the bottom was in, it frames the dip to $28,600 as a capitulation event on the back of negative news from China similar to the $30,000 flash crash in May. For Mike McGlone, senior market strategist at Bloomberg Intelligence, there was little reason to reassess a long-term bullish view on Bitcoin. He argued that $30,000 was just like $4,000 after the 60% price crash of March 2020 — a “line in the sand.”“Selling Bitcoin around good support & similar dips below most means as about $30K this year hasn’t ended well, and if the key question this time around is whether it’s different, we see a more-enduring bull market,” he explained.BTC/USD $30,000 vs. $4,000 comparison. Source: Mike McGlone/TwitterWyckoff signals spook tradersAmong the more cautious voices, meanwhile, was popular trader Rekt Capital, who on Wednesday was keenly eyeing the potential for Bitcoin to fulfill a negative Wyckoff pattern to exit to the downside.“In sum, if BTC loses this current downtrend wedging structure… BTC will breakdown into Phase E of Wyckoff Distribution,” he warned. “If $BTC breaks out from here and rejects harshly from the red area above… Phase E could also lie ahead.”Bitcoin negative Wyckoff forecast chart. Source: Rekt Capital/TwitterChina’s crackdown on mining, the main impetus for current price weakness, has divided commentators.Related: Chinese Bitcoin miners ‘not even in the mood to drink anymore’In an interview with mainstream media, Saifedean Ammous, author of The Bitcoin Standard and its sequel, The Fiat Standard, argued that miners forced to relocate from China were selling BTC that they otherwise would have held, creating additional price pressure.He added that the coins involved may well have been hodled for a long period, increasing the bearish mood as monitors picked up movements of coins that had not moved for a noticeable length of time.

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