Has Bitcoin Been Following a Wyckoff Distribution Pattern?

The fact that this possible pattern is transpiring very close to a long-term resistance level increases its significance. The distribution was outlined by well-known trader CryptoCapo_, who outlined a BTC chart that shows two very similar movements:

He stated that, due to the recent movements, distribution is likely to occur:

Distribution is more likely now. Looking for shorts soon.

In this article, we will take a closer look at the Bitcoin price and determine if a distribution is actually likely.

Distribution Schematics

Distribution occurs after a rapid upward move and serves as a way for market makers to sell their positions. The most common phases are shown in the image below. The trading range is found between $8600-$9400. If the Wyckoff schematic is followed, the price will make a low below the support level of this range, which is known as the ”show of weakness’.” Afterward, an upward move will follow that takes the price above the original high, otherwise known as “Upthrust.” What followed is a rapid downward move that causes a breakdown from the trading range. After this schematic is completed, all the supply would be redistributed and the price would drop afterward.

Fractal

The image in the tweet also outlined a fractal, one from August 2019. There are numerous similarities between the current movement and that which transpired in August 2019. First, the distribution began after a significant upward move. In addition, once the first high was reached, the Bitcoin price did not reach another one higher than the original. In the 2019 movement, once the price broke down from the ascending support line, it accelerated its rate of decrease. This move was combined with an RSI movement below 50. Since the price has already broken down from the ascending support line, if it acts in a similar way to August 2019, it will soon accelerate its rate of decrease and move towards the closest support area, which is at $7700. However, the movement of this fractal differs significantly from that of a regular bearish Wyckoff distribution, most notably in the fact that there is no ”upthrust” above the original high.

To conclude, it is possible that BTC is following some type of bearish Wyckoff distribution, which suggests that BTC will soon decrease towards the closest support area. An August 2019 fractal gives us an outline of the path the price might possibly take.