Decoding Bitcoin Price Using Wyckoff Approach

The cryptocurrency market as a whole, including Bitcoin, has had a terrible 2022. Furthermore, Bitcoin, the world’s biggest cryptocurrency, lost approximately 65% of its market value in 2022. In the past 24 hours, Bitcoin price has witnessed nearly 6% rise as per CoinMarketCap.

However, the price of Bitcoin has been on the rise since the beginning of this year. The recent multiple bank failures this year and rising interest rates boosted BTC prices as investors had lost faith in traditional banking institutions.

The leading cryptocurrency has seen its value rise and falls many times over the last several years. The Wyckoff approach is used by investors and traders to make sense of price movement. As it is often said and rightly so that price action is the best approach for any trader or investor.

BTC Price to Reach $37K

This strategy is useful for tracking the price of Bitcoin over time and spotting its many stages and patterns. The Wyckoff approach is basically classified into 7 stages and patterns as mentioned below.

• Preliminary Support (PS)
• Selling Climax (SC)
• Automatic Rally (AR)
• Secondary Test (ST)
• Phase B
• Spring Test
• Sign of Strength (SOS)

Here, we’ll examine Bitcoin’s recent ups and downs to better understand its current state and where it is likely to head by decoding the seven stages of the Wyckoff approach in simple terms.

Preliminary Support (PS)

The first step of the Wyckoff approach is the provision of preliminary support. It’s when the price of Bitcoin recovers after a drop and begins to rise again. The preliminary support phase of the most recent cycle began on the 6th of May 2022 and ended on the 12th of July 2022. Bitcoin’s price fluctuated between $28,700 and $32,100 over this time as mentioned in the chart.

Selling Climax (SC)

Phase two of the Wyckoff model is the bearish peak. When the price of Bitcoin hit $17,829 in June 2022, it was at its highest point for bears. At this stage, selling pressure is intense, and the price falls sharply.

Automatic Rally (AR)

After the last flurry of selling, Bitcoin begins its automatic rise. There is less of an impulse to sell now, and the price is rising. Bitcoin’s price increased to $25,100 from the selling peak zone of $17,829.

Secondary Test (ST)

The second round of testing occurs when Bitcoin’s price returns to its prior support. Bitcoin’s price plummeted to $18,000 in September 2022, retesting the selling peak zone.

Phase B

The Wyckoff method’s phase B is the fad phase. At this time, the price of bitcoin increased dramatically from $15,600 to $25,100. Phase B’s bull market ran from November 24, 2022, through February 21, 2023.

Spring Test

Bitcoin’s price enters the Spring Test phase when it reaches the support level set in the Preliminary Support phase. Bitcoin arrived at the Spring Test Zone on March 10, 2023.

Sign of Strength (SOS)

Bitcoin is now trading in Phase D, often known as the Sign of Strength phase. It is anticipated that the price would collect and subsequently climb to the markup zone during this time. The estimated target for Bitcoin by August 2023 is $37,590.

Conclusion

It is crucial for traders and investors to have an understanding of the cycles and patterns that Bitcoin goes through. The Wyckoff technique offers a methodical approach to examining Bitcoin’s price action. The stages and patterns that Bitcoin has recently gone through demonstrates the extreme volatility and unpredictability of the cryptocurrency market. Traders and investors may reduce their exposure to risk in the cryptocurrency market by learning to use technical methodological approaches like the Wyckoff approach.