Even after a strong rejection at $10,400 last week, Bitcoin has held in the high-$9,000s ever since. As of the time of this article’s writing, BTC is trading for $9,800, seemingly poised to break into the five digits for the umpteenth time in weeks.
The consolidation at such high prices has turned some optimistic. As Bitcoinist reported, a top trader thinks there is a low chance Bitcoin holds $10,500 the next time it tries to break past it.
Yet a number of traders have found that BTC’s recent consolidation satisfies a prominent textbook pattern indicating that a 30% correction is imminent.
Bitcoin Is Still Trading in a Corrective Pattern, Analysts Say
Bitcoin’s price action since April looks extremely similar to a distribution schematic defined by the late technical analyst Richard Wyckoff.
Wyckoff is a prominent technician especially known for his schematics, which are periods of price action that appear across assets and time frames showing that an asset has found a bottom (accumulation) or a top (distribution).
An analyst noticing the similarities recently shared the chart below, showing that BTC is likely nearing the end of a distribution top that will result in a 30% drop to the $7,000s in the three to six weeks.
The trader who shared the chart above isn’t the only individual to have noted how Bitcoin’s price action looks like a textbook Wyckoff Distribution.
Another commentator previously noted that the way in which Bitcoin’s market volume is appearing is also indicative of distribution.
They wrote in reference to last week’s attempted (and failed) breakout past $10,500:
“Volume-wise I can’t look past distribution up here given the reaction to the high sweep. There are very few re-accumulation ranges that we would expect to see that contain a move above the range which was so strongly rejected. Typically in a re-accumulation structure this move would hold, not come back inside. That’s usually one of our first signs of distribution.”
Related Reading: Last Time This Formation Was Seen, Bitcoin Peaked at $10,500. It’s Back Again
The Influx of Buying Pressure Could Negate Bear Case
Bitcoin’s technical weakness could be negated by an influx of buying pressure though, spurred by fundamental catalysts.
Fidelity Investments released a survey this week outlining that institutional investors are closely eyeing the crypto market despite anti-Bitcoin comments from individuals like Warren Buffett.
The survey found that out of those surveyed, 80% “find something appealing about the asset class.” The company specifically cited three trends making institutions “appealed”: crypto’s uncorrelated nature, strong technology, and “high potential upside.”
As it stands, only 36% of those surveyed have formally entered into the cryptocurrency market. Yet should the rest of institutional…