$BTC Model to explain what happens in financial markets during artificial pressure that disrupts the goals of the natural trend
Take the Wyckoff model as an example, known as an accumulation or distribution pattern depending on the context. Its strength lies in the moment it occurs.
Now, consider a scenario like this: a particular cryptocurrency attempts to align with the trend of Bitcoin, assuming that market conditions are suitable to gather liquidity to push prices upwards. In fact, it breaks a significant weekly/monthly resistance (shaded in yellow). However, unexpectedly, Bitcoin - which dominates liquidity and sentiment - forces the rest of the market to fall.
Question: Why would a particular cryptocurrency drop after suddenly breaking a strong historical resistance level? These levels are generally not easily broken, and should not be lost so easily.
Bitcoin's liquidity dominance
Bitcoin's control over market liquidity makes it the main indicator and driver of the overall performance of cryptocurrencies. Any cryptocurrency that moves against it risks losing momentum and value, regardless of its technical strength.
The current stagnation
Today, Bitcoin has reached its all-time high, however, many altcoins have returned to their lowest levels in several years and have failed to reverse Bitcoin's bullish results. So, what is the next logical step?
In 2021, some cryptocurrencies experienced growth of more than 40 times in 4 months. What we might be witnessing now is a similar increase, compressed into 3 to 4 weeks -