Bitcoin price is falling below $ 36,000 and a centuries-old financial model predicts a major BTC crash

The highly confident Bitcoin (BTC) bulls will have to fight more than just Elon Musk’s comments since a price prediction model developed more than 100 years ago by technical analysis pioneer Richard Wyckoff. Also contradicts their unbridled bullish predictions.

The calling The Wyckoff Method is a model that uses a five-phase approach to determine price trends, which primarily involve the psychological response of investors to the supply and demand of an asset.

With an accumulation z. When an asset bottomed out after a sharp downturn, the five stages in the sequence include the Sell Climax (SC), Secondary Test Success (ST), Last Support Point (LPS), Sign of Fortaleza (SOS), and “Steps.” “which mean more demand for the asset.

Wyckoff events and phases during the stack. Source: Stockcharts.com
Bitcoin price is falling below $ 36,000 and a centuries-old financial model predicts a major BTC crash
Bitcoin price is falling below $ 36,000 and a centuries-old financial model predicts a major BTC crash

On the other hand, The distribution case looks like a 180 degree version of the accumulation case, which consists of five phases that follow a strong upward trend in price..

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

The Preliminary Supply (PSY) signals a strong upward shift in demand, as the price tends to rise and at the same time go hand in hand with the increase in volume. However, the uptrend eventually ends, resulting in a buy peak (BC). What follows is a sell-off caused by a lack of demand near the asset price cap in the face of abundant supply. Wyckoff called the Automatic Response Correction (AR).

Together PSY, BC and AR form phase A.

For his part, Phase B involves a false jump towards the BC buy peak called the Secondary Test (SET) followed by another dip that indicates the asset’s weak signal (SOW). In phase B there are also mostly weak rebound attempts from SOW to upthrust or lift (UT). Later, the transition to Phase C shows a final pressure in the distribution known as Upward Thrust After Distribution (UTAD).

Phase D involves an alarming decline in demand versus supply, also known as the Last Point of Supply (LPSY), which in Phase E leads to a price drop.

The price of Bitcoin in “Phase C”

Tempting Beef, an Independent Market Analyst, alarmedTo his followers who Bitcoin price has entered the accumulation cycle of the classic Wyckoff model. The analyst, who works under a pseudonymous company, highlighted the recent rallies in the Bitcoin market and fearfully pointed to them Potential for the BTC / USD pair to sustain an uptrend above $ 40,000 due to weakening supply and increasing demand.

“The offer is running out. It could be ready for Phase C.”

But Tempting Beef presented a contradicting scenario by reinterpreting Phase A according to the Wyckoff distribution schemes. The analyst highlighted Bitcoin price rebounded from the $ 30,000 low as a PSY signal, resulting in BC, AR, ST, SOW and other consecutive events mentioned in the distribution phases.

Wyckoff’s conflicting scenarios appear in Tempting Beef’s Bitcoin Market Outlook. Source: Twitter

Bitcoin slipped back into Phase C and was alarmed by the drop in demand in the case of the Wyckoff distribution events. Would that mean the lowest risk point of the cryptocurrency is the downside: a price crash.TO

Technical data is skewed downwards

Bitcoin’s recent correction in the spot market came after a year of rally. Between March 2020 and April 2021, the BTC / USD exchange rate rose to 1.582%, reaching an all-time high of nearly $ 65,000.

However, the pair lost more than 50% of its price hike. Prices plummeted, rebounded and are now consolidating sideways (almost flat) with no specific short-term directional orientation. Therefore, now it looks more like a Wyckoff distribution model, as the phases follow a year-long movement up rather than down.

In the meantime, Bitcoin price has consolidated within a symmetrical triangle structure after the sharp downward correction after mid-May, which indicates it the pattern is indeed a bearish pennant. Technically, bearish pennants will cause prices to drop as much as the magnitude of the previous move.

Bitcoin price’s bearish pennant setup suggests BTC is falling below $ 20,000. Source: BTCUSD on TradingView.com

BTC / USD trading is around $ 36,000, or 44.59%, down from its high of $ 65,000 at the time of this writing.

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