Recently, the market has been extremely volatile, and market sentiment has also been sluggish. I decided to go through the Wyckoff Theory systemically, because these things are still quite helpful for judging market direction.

First, let’s start with the law of supply and demand. Put simply: when supply is less than demand, prices rise; when supply exceeds demand, prices fall. Why is Bitcoin bullish in the long run? One reason is that the supply cap is firmly locked—there will always be only 21 million coins, which is hard scarcity. Second, demand is increasing step by step, with more and more people recognizing its value. In the short term, all kinds of favorable and unfavorable news can affect price and trading volume, but the key is that excess supply will ultimately be absorbed. For example, when water costs 100 dollars per bottle, no one buys it; when it drops to 0.1 dollars, everyone will stock up on a few bottles. Things with consensus— even if a surplus appears in the short run—can still be digested in the end. But those altcoins without consensus are different: even if they were once doing great, they will eventually disappear into thin air, because the market simply doesn’t recognize their value in the first place.

Next is the law of cause and effect. This theory sounds a bit circuitous, but the core idea is actually: “How long the horizontal move is, how high the vertical move will be.” The longer the period of consolidation and oscillation, the more energy is accumulated, and the subsequent upside and downside move will be more intense. Wyckoff’s accumulation-bidding model and the distribution model are used to judge this kind of cause-and-effect relationship. The accumulation phase within the trading range represents the main players quietly accumulating positions, while the distribution phase is when they slowly start selling. However, there’s something interesting here: many times, we see the result first, and only then infer the reasons beforehand—this is also why trading in the market is so complicated.

Finally, let’s talk about the law of input and output. A simple translation is that price changes must be reflected in trading volume. A price rise accompanied by an increase in volume is a healthy signal, but if prices rise and volume is small, you need to be on guard against a bull trap. If the price doesn’t rise much but the trading volume expands instead, that could mean you’re running into selling pressure. Especially when breaking through key resistance levels, you must check whether trading volume confirms the move to prevent a false breakout. Right now, BTC trading volume is around 380 million dollars, and the market’s bearish sentiment has reached 50%. In this kind of environment, it’s even more important to focus on the signals from the Wyckoff accumulation model to determine whether the main players are accumulating or distributing.

Volume analysis also involves complex combinations such as no-volume, low-volume, double-volume, high-volume, shrinking volume, stair-step volume, and others. If there’s an opportunity later, we can dive deeper into attack-and-defense strategies under high-volume candles.