Trades About To Happen — Bitcoin Edition. Future Advice from a 19th century stock trader.

Richard Demille Wycoff. Born November 1873 was a New York stock trader who keenly analyzed his environment & the mechanisms which drove it in the early decades of the 1900’s. His learnings coined (No pun) the Wycoff method.

So.. How is Richard relevant to the price of Bitcoin in 2021?

Put simply, Many and most things change in time but some things remain constant. Collective human behavior and more specifically its approach to asset classes, is something that has not.

Year over Year, humans and our emotions have been one of the key driving factors that underpin the broader, multi-year/multi-decade market cycles that have that uncanny and sometimes spooky knack of co-coinciding with the trigger points of bull and bear cycles, not just in equities markets but across all asset classes.

Enter the Wycoff method. His learnings from wall street in those early decades lead Richard to coin the ‘Comp Man’ or composite operator, giving the collective market as a whole its own identity. The proposition was, that investors and traders should study the stock market as if a single entity was controlling it, giving the average investor a means to better understand marked trends & more importantly the whales that drive them.

This In essence meant that the Composite Man represents the biggest players, the market makers, such as high net worth individuals and institutions. Comp man always acts in his own best interest to ensure he can buy low and sell high.

The Composite Man’s behavior is the opposite of the majority of retail investors, which Wyckoff often observed losing money. But according to Wyckoff, the Composite Man uses a somewhat predictable strategy, from which investors can, when understood, be used to gain a market edge.

Bitcoins the newest asset class in the arsenal. In its relatively short ascent to gold 2.0, its already apparent that bitcoins emerging 4 year cycle is being driven by the herd. The 2017/18 bull run was largely driven by retail investors & the current bull run by a combination of retail & the institutional class. Both have brought on a cocktail of fear & greed that drives sentiment up and down.

These cycles consists of four main phases: accumulation, uptrend, distribution, and downtrend.

Accumulation

The Composite Man accumulates assets before most investors. This phase is usually marked by a sideways movement. The accumulation is done gradually to avoid the price from changing significantly.

Uptrend

When the Composite Man is holding enough shares, and the selling force is depleted, he starts pushing the market up. Naturally, the emerging trend attracts more investors, causing demand to increase.

As the market moves up, other investors are encouraged to buy. Eventually, even the general public become excited enough to get involved. At this point, demand is excessively higher than supply.

Distribution

Next, the Composite Man starts distributing his holdings. He sells his profitable positions to those entering the market at a late stage. Typically, the distribution phase is marked by a sideways movement that absorbs demand until it gets exhausted.

Downtrend

Soon after the distribution phase, the market starts reverting to the downside. In other words, after the Composite Man is done selling a good amount of his shares, he starts pushing the market down. Eventually, the supply becomes much greater than demand, and the downtrend is established.

So Does Wycoff’s method work?

Well, the challenge is to decide for yourself but lets consider the evidence. Its still widely used today after 12 decades, across a vast range of asset classes as well as across a vast range of traders of all skill levels and therein lays its timeless appeal. Its one of those rare tools that can be universally deployed across most charted markets no matter how closely your looking. On a 15 minute chart or a 15 day chart it presents value because of one fundamental truth. Comp man never changes.