The Price of Bitcoin Has Likely Already Bottomed, Says Analyst
According to popular price analyst Willy Woo, the price of Bitcoin (BTC) has likely already bottomed out from a sharp pullback that followed new all-time highs last week. Woo provided a list of “good news” and “bad news” surrounding Bitcoin’s fundamentals, comparing the asset’s recent consolidation to that of past bull market cycles.
Bitcoin’s Spent Output Profit Ratio (SOPR)
Woo began his analysis by looking at Bitcoin’s Spent Output Profit Ratio (SOPR), an on-chain metric that gauges whether the average Bitcoin transaction is currently realizing a profit or a loss. The ratio recently spiked to highs not seen since January 2021, suggesting high profit-taking and indicating a potential lengthy consolidation period.
A Similar Correction to Previous Cycle
After reaching $74,000 last week, the price of Bitcoin slid back to $61,000 on Wednesday before slightly bouncing back to $65,200. This 17% pullback is reminiscent of when Bitcoin broke all-time highs during its previous cycle, experiencing a 31% correction at the time. Woo believes that this correction is typical before a pump and serves to shake out weak hands in the market.
Expected Inflows and Long Interest
Bitcoin’s “expected inflows,” which measure the market’s expected buying pressure based on Bitcoin’s 24-hour simple moving average, also appear to have bottomed. However, long interest is still built up within Bitcoin’s perpetual futures market and needs to draw down by 10% to 20% before returning to a normal range.
March Sideways Trading and Bullish Macro Structure
Woo noted that historically, March has been a sideways trading month for Bitcoin, while April may see choppy movements in both directions based on present data. In the long term, he believes that the macro structure remains bullish. Overall, Woo concluded that it’s a patience game and that the short-term consolidation bottom is likely in. However, there’s a chance that consolidation may continue until the halving event, which typically brings downward volatility.
Bitcoin ETF Reversal
An on-chain analysis by CryptoQuant reveals that Bitcoin miners have ramped up their BTC sales in recent months as the coin appreciates in value. This profit-taking behavior is similar to patterns observed during previous cycle peaks. Additionally, Bitcoin spot ETFs in the United States have experienced an unprecedented wave of outflows, losing over $700 million in the past three days alone.
Hot Take: Bitcoin’s Bottom is In
In conclusion, popular price analyst Willy Woo suggests that the price of Bitcoin has likely already bottomed out following a sharp pullback from new all-time highs. He points to factors such as Bitcoin’s Spent Output Profit Ratio (SOPR) and expected inflows as indicators of a potential bottom. While there are still some bearish signs, including long interest in Bitcoin’s futures market and potential volatility in the coming months, Woo maintains a bullish outlook for the cryptocurrency in the long term. It’s important to exercise patience and be prepared for potential fluctuations as Bitcoin continues its price journey.
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