Bitcoin price continues to trade sideways for several weeks now, bringing the asset’s notorious volatility to a chilling halt. This type of price action often indicates accumulation, which typically takes place at lower prices.
Additional data reflecting crypto exchange BTC balance also suggests that accumulation is taking place, all while Bitcoin trades just below $10,000. If this really is an accumulation phase, what comes next for the first-ever cryptocurrency?
Is The Next Cryptocurrency Bull Market Upon Us?
The leading cryptocurrency by market cap appears to be at an impasse. The asset’s halving is long behind us, yet no new bull market is here as many had claimed.
The longer it takes for the cryptocurrency to surge, the more naysayers come out of the woodwork to bash valuation models such as stock-to-flow, and others.
Bitcoin price predictions range from zero to over $1 million per BTC eventually. The ultra-scarce digital asset could someday replace all of the world’s fiat money, or it could fizzle out completely. There is little room for in-between scenarios.
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The asset has been in a long-term uptrend and secular bull market, with few downtrends in between. The cryptocurrency is now at that critical moment where either a new bull market is set to begin, or a deeper fall into the depths of the ongoing bear market could be next.
Bitcoin has thus far been unable to break above $10,000 and remains that way even today. But the major difference between now and then, is that data suggests this latest visit to $10,000, is an accumulation phase and not distribution.
Data Signals Bitcoin Accumulation Phase Despite Prices Near $10,000
According to Wyckoff theory, markets go through four distinct phases: accumulation, mark up, distribution, and markdown. Investors accumulate large holdings of assets at lows, then prices surge during the markup phase. That’s when the early investors begin to distribute their assets, taking profit, and starting a markdown phase. The cycle then repeats all over again.
Due to Bitcoin’s hard-coded digital scarcity, when and at what price the asset is accumulated at may be drastically different than other assets.
Bitcoin was accumulated full force when the asset fell to $3,200 in December 2018. Then prices were marked up, and distribution took place all throughout the second half of 2019.
Distribution also took place each time Bitcoin price reached $10,000 or more. But now, the key price level could be where accumulation is unfolding.
We are in the #BTC accumulation phase.
The 30- and 90-day moving average gap of all exchanges’ reserve represents the downside risk. It hit a record low in May this year and is still below zero. pic.twitter.com/IsljYG6h0Z
— Ki Young Ju (@ki_young_ju) July 13, 2020
New data depicting the 30- and 90-day moving average “gap of all exchanges’ reserve” BTC, shows that the Black Thursday collapse sent Bitcoin reserves to a record low. Reaching such lows historically has acted as a powerful buy signal.
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Zooming out further reveals that each time the moving average of exchange reserve BTC supply, Bitcoin went on a powerful rally shortly thereafter.
Source: CryptoQuant
The metrics indicate that Bitcoin is being accumulated full bore, much like it was when the asset fell to its bear market low at $3,200. That low may have been the point of maximum financial return during this bear and bull cycle.
The next stop could be a new record peak in BTCUSD before the entire cycle repeats all over again.