Accumulation and Distribution

Accumulation is the phase where smart money quietly builds a position, typically during a period of price consolidation. Distribution is the opposite phase, where smart money sells its holdings to retail investors, usually after a significant rally.

These phases are the engine behind market cycles and the formation of patterns like double tops and bottoms. Recognizing these phases is essential for fundamental and technical analysis.

In crypto, accumulation often happens after a period of intense selling, while distribution follows a parabolic blow-off top. Traders look for signs of accumulation and distribution to align their strategies with the dominant market force.

This concept is rooted in the idea that market movements are driven by the transfer of assets between participants with different time horizons. Understanding these phases allows for better long-term positioning and risk management.