A recent upswing in the price of Bitcoin (BTC) following a nail-biting price crash below $30,000 on June 22 has activated a classic financial model's bullish outlook on the cryptocurrency.

Called the Wyckoff method — created by Richard Wyckoff in 1888 — the model attempts to navigate financial market trends based on the relationship between the supply and demand of assets. The method has two schematics: accumulation and distribution.

In an accumulation setup, an asset signals bottoming out following a sharper price decline. It eventually leads to the price rebounding to the upside. Meanwhile, the distribution setup sees the asset topping out after a solid price move uphill. After that, the price reverses direction to the downside. 

Each setup has five unique phases. For example, in the distribution phase, an asset goes through the following events across the said phases (in order): preliminary supply (PSY), buying climax (BC), automatic reaction (AR), secondary test, sign of weakness (SOW), last point of supply (LPSY) and upthrust after distribution (UTAD).

Wyckoff events and phases during distribution.

Meanwhile, in the accumulation schematic, an asset logs the following events across its five phases (in order): preliminary support (PS), selling climax (SC), automatic rally (AR), secondary test (ST), last point of support (LPS), and sign of strength.

Wyckoff events and phases during accumulation.

Wyckoff confirms Bitcoin accumulation

Comparing the Bitcoin recent price action and the events presented in the Wyckoff accumulation schematic, it appears the cryptocurrency is grappling with its last point of support of Phase C.

Bitcoin phases imagined per Wyckoff accumulation schematic. Source: TradingView

Phase A in the chart above shows exhaustion in the previous downside momentum at the secondary test (between $28,8,00 and $30,000) and selling climax (approximately $34,000) levels. Up to this point, the supply was dominant as per the Wyckoff method.

An automatic rally (AR) approached in phase B, led by both institutional demand for Bitcoin and short-covering. Later, the price repeatedly dipped toward secondary tests and bounced back after testing the selling climax horizontal line from phase A.

Now, Bitcoin's price has entered phase C, leaving up it to the "smart money" to decide whether the cryptocurrency is ready to go higher. An upside confirmation would come if the ongoing rebound extends above the SC-ST phase, accompanied by stronger volumes.

Phase D and phase E reflect an all-and-all recovery run toward $60,000.

"Seems like a possibility," said market analyst Kevin Swenson. "We just got the lower low at $28.8K ... If this model plays out, we will now enter the final phase of the recovery back up." He added:

"In terms of the Wyckoff method, this $28.8K lower low is very similar to the $65K higher high. Both cause a maximum emotional effect on market participants."

Meanwhile, Bloomberg Intelligence's senior commodity strategist, Mike McGlone, noted — albeit not referring to the Wyckoff method — that repeated bullish rejections near $30,000 are similar to how Bitcoin bounced from $4,000 in 2019 to 2020.

Bitcoin bulls show resilience at $30,000. Source: Bloomberg Intelligence

"Selling Bitcoin around good support & similar dips below most means as about $30K this year hasn't ended well," he added, "and if the key question this time around is whether it's different, we see a more-enduring bull market."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, and you should conduct your own research when making a decision.