Distribution Phase

The distribution phase is a stage of the market cycle, associated with the early twentieth-century trader Richard Wyckoff, in which informed or large investors sell their holdings to the public after a strong price rise. Prices tend to move sideways in a range near their highs while trading volume stays high, as eager late buyers absorb steady selling. Analysts look for signs such as failed attempts to make new highs, heavy volume on down days and weakening momentum indicators such as the accumulation/distribution indicator. The phase is the mirror image of the accumulation phase and, in the classic model, is followed by a markdown, or falling, phase. In crypto, watchers track transfers by whales to exchanges as a possible sign of distribution. The phases are usually clear only in hindsight, and many apparent distribution ranges end in further gains. Also see bull trap.