Bitcoin price has broken out above $ 55,000, removing any downtrend resistance and possibly signaling that the bull run is on again. The move may have taken the bears by surprise, but the blueprint for what happened was created about 90 years ago.
Here’s a history lesson on Richard Wyckoff, the Wyckoff Theory, and how the 19th-century market wizard could predict the price development of a digital asset that didn’t hit the market until the 2000s.
Everything you need to know about Rickard Wyckoff and his theory
Richard Wyckoff was known as a US stock market investor, according to Wikipedia. He founded and also served as the editor of the Magazine of Wall Street in the early 1900s.
Wyckoff himself was particularly intrigued by the underlying mechanisms that led to trends forming or changing. He spent much of his later career studying markets and other investors of the time. The names of those he studied include Jesse Livermore and JP Morgan.
Related reading | Ethereum may trade within the Livermore accumulation cylinder pattern
Wyckoff believed in the idea of a “composite operator” or a unique mind controlling the ebb and flow of the market. Wyckoff then spent his final days in the 1930s studying the behavior of this “compound operator” and developing certain schemes that would tell traders if the market is in one of four different phases: accumulation, premium, distribution, and discount .
Stages of re-accumulation and redistribution are also common as midpoints before the cycle repeats. But how does all of this apply to Bitcoin?
In an article I shared on @newsbtc last week, I suggested that the price action on #Bitcoin looked like a distribution * before * the big drop. The video below is the * after *. pic.twitter.com/WwVs7YQxzb
– Tony “The Bull” Spilotro (@tonyspilotroBTC) April 23, 2021
Bitcoin price breakout could be predicted using a 90-year-old scheme
Bitcoin’s price movement was clearly distributed when the leading cryptocurrency by market cap hit $ 65,000 in April 2021, as the tweet above shows.
Related reading | Bulls Taking Back Control Of Bitcoin Trend Strength: What To Expect
After crypto suffered a huge slump in May, it was then up to the “composite operator” to decide whether the asset would be redistributed or re-accumulated. The following graph makes it pretty clear what happened to both of them.
Wyckoff’s accumulation should result in a large serve and new all-time highs | Source: BTCUSD on TradingView.com
What should come next is a markup phase. And when that’s over, the redistribution will take place again and put an end to the current bull cycle once and for all.
At this point, techniques developed more than 90 years ago would suggest looking for signs of redistribution or accumulation on the ground. But that’s only possible if you believe in the power of the Wykcoff theory. Do you?
Follow @TonySpilotroBTC on Twitter or via the TonyTradesBTC Telegram. The content is educational and should not be viewed as investment advice.
Featured image from iStockPhoto, charts from TradingView.com