Early this year, I wrote that I expected Bitcoin to rally due to a powerful indicator, known as Wyckoff’s Method.
Richard Wyckoff developed a system in the early 1930s that consisted of a series of market principles to pinpoint the behaviour of markets. It identifies trends and patterns when the market is set to head up, sideways or down.
The last time I wrote about this, was when Bitcoin was in an accumulation phase, preparing for upside to come.
Well, that day has come.
In this article, we’ll go through the four phases and why we could see Bitcoin at $50,000 soon.
Let’s start with how it works…
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The four phases of Wyckoff’s method
Take a look at this chart.
There are four distinct phases the market goes through…
1. Accumulation (Consolidation)
2. Markup (Advancing)
3. Distribution (Consolidation) and
4. Markdown (Declining)
1. Accumulation (Consolidation) Phase
Accumulation is the first sideways phase the market moves through.
During this time, you’ll see the large institutions and investors start to buy and accumulate Bitcoin at a lower price.
You’ll see a large volume of buying, but the price stays stagnant for a while.
This phase can last for a few weeks to several months.
We can see in the chart above, the Accumulation phase started in January 2020 and ended around October 2020.
And more recently, the next Accumulation phase took place on 13 September 2023 and ended around 14 January 2023.
After the accumulation phase, there is…
2. Advancing (Markup)
Once the large institutions have accumulated their orders, this is where market demand picks up with all the retail traders.
This leads to the next big phase…
The markup phase is characterized by a strong uptrend.
This phase can continue for a couple of months or even one or two years.
In this case, Bitcoin had its Markup phase from October 2020 to June 2021.
This is where we saw the price rally from a low of $10,000 up to $64,000.
And more recently, after the consolidation (accumulation) phase ended on 14 January 2023, that’s where we really started to see Bitcoin shoot up in price.
It went from around $17,363 to $36,547.
If history repeats itself, we are likely to see Bitcoin head to the first target of $50,000.
And if we get further upside, it’ll easily hit $60,000 from there.
However, there are two more phases of Wyckoff’s method you need to know about.
3. Distribution Phase (Consolidation)
Once the price has reached a new high and demand starts slowing down, this is where the larger institutions will return and sell their positions.
This will be the Distribution phase.
It’s another market environment where we can see sideways movement with a consolidation range.
We’ve only seen one Distribution phase with Bitcoin.
This phase lasted from June 2021 to 22 March 2022.
Once the Distribution phase has taken place, there is the last phase to consider…
4. Markdown Phase (Declining)
Once the big boys have sold off all their Bitcoin, the market enters the markdown phase.
This is shown by a strong downtrend as retail investors panic and start selling their assets at lower prices.
Last year, we saw major panic selling during this phase. Traders and social media called it the ‘Crypto Winter’.
It’s where all confidence was lost in the crypto space. Exchanges closed and various exchanges got caught cooking the books.
So how can we use Wyckoff’s method to spot the next rally?
Wyckoff’s method can help determine the phase a market is in.
It can prevent you from buying, when the price is on the down turn. It can also stop you from selling, when the market is rallying.
Right now, it’s in the markup phase. So, we should look to buy the market and expect the price to run up from here.
My prediction is Bitcoin is on the way to $50,000 and possibly $60,000.
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