Bitcoin’s recent positive price action, that of the overall markets, has seen $23 billion come back into the ecosystem in little over a week, and has had some technical analysts wondering if Bitcoin has finally moved from its distribution phase to its accumulation phase, which is the precursor for a return to the good times. We look at the stats and see if there is any merit in the theory.
I think the bottom was put in. However I think the accumulation phase is going to last until the fall and it will be range bound while energy is gathered for a sustained bull run.
— SavannahREI (@SavannahREI) February 24, 2019
Distribution, according to the BitStarz crypto glossary, is the point when “the supply far outstrips the demand of a token, leading to neutral prices and high volatility.” This is essentially the peak of a market cycle and the dropoff that follows, where selling volume replaces buying volume and huge volatility ensues, pulling the price down. This activity describes what we have been witnessing for several months with Bitcoin, but the clues are there that we are now in the final throes of distribution. We have seen two huge phases of price stagnation since the middle of 2018, indicative of the distribution phase coming to an end, although volatility has still been decent, if range-bound.
Distribution is also typified by decreasing volume. Take a look at Bitcoin’s volume over the last eight months:
The second half of 2018 saw a steady decrease in volume, and it even reverted to these low levels after the spikes towards the end of the year. However, when we zoom into the trading volume that took place throughout December, compare that month’s pattern with that of a generic accumulation phase, which is where buyers start stepping back in to buy up for the next bull run:
Uncanny, right? This isn’t concrete evidence of an accumulation phase of course, but it’s very suggestive, especially when it’s followed by the recent $1,000 rise we’ve seen over the last two weeks. There could yet be more distribution to come (i.e. more price drops), but the signs seem to suggest that the selling has more or less dried out and that we could have already entered the accumulation phase, meaning it could soon be time to start picking up your favorite coins once again. And in case you didn’t know, here’s a technical description of what happens when accumulation is finished: