Bitcoins Distribution vs Re-Accumulation Debate
Updated
After Bitcoins recent decline below key support level of 42K there is a lot of belief that Bitcoin and crypto in general are entering a bear market. With that key loss of 42K and multiple rejections in the assets attempt to recover and commit above that 42K area this argument for bear market holds lots of weight... HOWEVER
Are we about to see a dead cat bounce in the form of a rejection off 42K resistance or even an attempt to break above it in the form of an upthrust action and break back down into the 30's and then maybe distribute into the 20's?
OR..
Is this an accumulation range and we start to rally back towards all time highs? Here are some reasons why I think this could be accumulative and not distributive and why my bias is telling me UP.
Represented here is the 4H timeframe where you can see after the loss of 42K we formed successive lower highs with poor attempts to rally towards the top of the trading range. If you look at the weekly time frame you can see that the area between 29K and 35K are heavily defended by the bulls and time spent in the lower region of our trading range has been reasonably short lived as shown by the demand tails (wicks).
One of the laws of Wyckoff "Effort vs Result". Those demand wicks show us that any effort by sellers to push down price has had very little result, this shows us that demand is present in this lower price range of the the trading range.
Whilst we were putting in lower highs it seemed as if market participants were sitting on their hands, demand was not revealing itself and showing some bearish signs in the process. We did get a bottom reversal on the last test of the lower trading range support and rallied very well on widespread and higher volume. We broke the lower high trend, pulled back and retested before further advancing the assault to the upper 30's and 40K area.
So far there are 3 scenarios.
Scenario 1 - The distribution that everyone has been talking about for Bitcoin. If this is the case then we will see further supply into the market and our bounce off 42K resistance will be in the form of a UTAD (Upthrust after distribution) and continue to the downside towards lower 30's and into the 20's. This would be the LPSY (Last point of supply) on our larger time frame ie. daily/weekly. I do not think this is the case
Scenario 2 - We have just left Phase C of our accumulation structure and are now entering Phase D. This is very much in play and we have just seen 2 x LPS (Last point of Support) moments where price rallies on high demand, pulls back and continues on towards resistance showing signs of strength. This is very much in play and I beleive we could see an attempt to overcome the 42K area anytime soon.
Scenario 3 - We get rejected at 42K resistance, reverse head back down on the slow grind to 30K support and maybe the CO (Composite Operator) will perform a shake out and penetrate support down to around the 27K area in the form of a shake out spring action before re-attempting the rally on even more higher demand than we saw this time and finally breaking 42K and continuing to the upside and the bull run.
Re-Accumulation after decline. What is it?? and why do I think we are in it?!
Whilst everyone is calling Bitcoin DISTRIBUTION I beleive that is not true and this is a REACCUMULATION AFTER DECLINE. This type of structure is where price shows distributive properties on an intermediate top in an over extended market before declining and then reaccumulatiing at lower levels as one whole structure. This is where people get confused with Wyckoff “patterns” they think that the pattern played out without understanding that if this was a true distribution structure we would see continuation to the downside as institutional operators unload their holdings increasing the levels of supply in the market.
This is why I believe we are in reaccumulation period. There is a really great analog from the S&P 500 in 2011 that showed a very similar structure to what we are seeing in Bitcoin now today. You can see this by clicking the link idea in the “Link to Related Ideas” section.
This is just an idea, I have done my analysis to the best of my knowledge and ability. Anything can happen although my Scenarios 2 and 3 I have my money on and not the Scenario 1! Its been great shake out of weak hands in an incredibly immature market and I personally beleive that BTC is undervalued here. I have been buying, I think this was a great opportunity. and if I am wrong and we do go down into the 20’s I will be buying more!
Lets see…
Are we about to see a dead cat bounce in the form of a rejection off 42K resistance or even an attempt to break above it in the form of an upthrust action and break back down into the 30's and then maybe distribute into the 20's?
OR..
Is this an accumulation range and we start to rally back towards all time highs? Here are some reasons why I think this could be accumulative and not distributive and why my bias is telling me UP.
Represented here is the 4H timeframe where you can see after the loss of 42K we formed successive lower highs with poor attempts to rally towards the top of the trading range. If you look at the weekly time frame you can see that the area between 29K and 35K are heavily defended by the bulls and time spent in the lower region of our trading range has been reasonably short lived as shown by the demand tails (wicks).
One of the laws of Wyckoff "Effort vs Result". Those demand wicks show us that any effort by sellers to push down price has had very little result, this shows us that demand is present in this lower price range of the the trading range.
Whilst we were putting in lower highs it seemed as if market participants were sitting on their hands, demand was not revealing itself and showing some bearish signs in the process. We did get a bottom reversal on the last test of the lower trading range support and rallied very well on widespread and higher volume. We broke the lower high trend, pulled back and retested before further advancing the assault to the upper 30's and 40K area.
So far there are 3 scenarios.
Scenario 1 - The distribution that everyone has been talking about for Bitcoin. If this is the case then we will see further supply into the market and our bounce off 42K resistance will be in the form of a UTAD (Upthrust after distribution) and continue to the downside towards lower 30's and into the 20's. This would be the LPSY (Last point of supply) on our larger time frame ie. daily/weekly. I do not think this is the case
Scenario 2 - We have just left Phase C of our accumulation structure and are now entering Phase D. This is very much in play and we have just seen 2 x LPS (Last point of Support) moments where price rallies on high demand, pulls back and continues on towards resistance showing signs of strength. This is very much in play and I beleive we could see an attempt to overcome the 42K area anytime soon.
Scenario 3 - We get rejected at 42K resistance, reverse head back down on the slow grind to 30K support and maybe the CO (Composite Operator) will perform a shake out and penetrate support down to around the 27K area in the form of a shake out spring action before re-attempting the rally on even more higher demand than we saw this time and finally breaking 42K and continuing to the upside and the bull run.
Re-Accumulation after decline. What is it?? and why do I think we are in it?!
Whilst everyone is calling Bitcoin DISTRIBUTION I beleive that is not true and this is a REACCUMULATION AFTER DECLINE. This type of structure is where price shows distributive properties on an intermediate top in an over extended market before declining and then reaccumulatiing at lower levels as one whole structure. This is where people get confused with Wyckoff “patterns” they think that the pattern played out without understanding that if this was a true distribution structure we would see continuation to the downside as institutional operators unload their holdings increasing the levels of supply in the market.
This is why I believe we are in reaccumulation period. There is a really great analog from the S&P 500 in 2011 that showed a very similar structure to what we are seeing in Bitcoin now today. You can see this by clicking the link idea in the “Link to Related Ideas” section.
This is just an idea, I have done my analysis to the best of my knowledge and ability. Anything can happen although my Scenarios 2 and 3 I have my money on and not the Scenario 1! Its been great shake out of weak hands in an incredibly immature market and I personally beleive that BTC is undervalued here. I have been buying, I think this was a great opportunity. and if I am wrong and we do go down into the 20’s I will be buying more!
Lets see…
Note
Looks like Phase D of Accumulation is nearly invalidated and is unlikely from here now.Now to scenario 3 which means we revert back to PHASE B of our accumulation and look for a deep spring shake out penetrating support. I will make an educated guess to around 27K but I am not a fan of predictions to be honest.
I am short until low 30's then we see what price gives us next.
TRADE WHAT YOU SEE
Note
Price currently testing support. Looks like this structure could fail soon.Will we see a spring or is this phase D of redistrubution?
Note
Spring could still be valid here we could do with a daily close over 36K in the next day or soNote
Looks like spring is still valid
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