Bitcoin has been experiencing a significant sell-off, with the price dropping by over 5% in a single day and breaking below the $60,000 mark. This has led to concerns among investors about whether it is the right time to buy or if the price will continue to spiral lower. However, one analyst believes that this could be an opportunity to stack up on Bitcoin, as it is on the cusp of the “Spring” phase within the Wyckoff re-accumulation model.
The Wyckoff model is a technical analysis tool used by traders and chartists to predict potential price movements based on price and volume patterns. The “Spring” phase is particularly important, as it signifies a period when prices are likely to break out from the current range with increasing trading volume. Looking at the Bitcoin daily chart, it is clear that prices have been consolidating, with support around the May and June 2024 lows, and resistance between $57,000 and $72,000.
The recent drop in Bitcoin price is attributed to miner capitulation, according to on-chain analyst Willy Woo. Since the April 20 Halving, the Bitcoin network has reduced BTC rewards by half, putting pressure on miners to upgrade their equipment and operate more efficiently. This has led to weaker miners exiting the market, as they are unable to compete profitably with the more efficient ones. As a result, miners have been offloading BTC over the past eight months, contributing to the downward trend in prices.
Despite the sell-off driven by miner capitulation, long-term holders of Bitcoin, such as institutions and whales, have not been selling their holdings. This is evidenced by the high level of “illiquid supply” for Bitcoin, which represents coins that have not been moved for over two years. Additionally, the approval of the first Bitcoin exchange-traded fund by the United States Securities and Exchange Commission in mid-January 2024 has boosted confidence in Bitcoin among institutional investors.
In conclusion, while Bitcoin is currently experiencing a sell-off driven by miner capitulation, there are reasons to believe that the cryptocurrency could be primed for a breakout in the near future. The Wyckoff re-accumulation model suggests that Bitcoin is entering the “Spring” phase, which could lead to a significant price increase if there is no confirmation of further losses. Additionally, the strong support from long-term holders and institutional investors indicates that there is still confidence in Bitcoin as a long-term investment.
