After the expected consolidation, the outlook is strongly bullish.
A large number of wealthy investors would be entering the bitcoin market.
In his most recent newsletter on the bitcoin (BTC) market, well-known analyst Willy Woo claims that what makes bitcoin’s current bull rally sustainable is strong demand from large investors.
This increasing flow of capital will allow price consolidation in the short term, Woo notes, while in the long term, the analyst believes that “we are still in an early stage of the bull market.”
The rapid growth in the number of whales, as investors who own more than 1,000 BTC are called, has been one of the key factors in the great bitcoin boom since mid-DecemberWoo argues. “Very High Net Wealth Individuals (HNWI) have been arriving in large batches, after bitcoin validation by institutions,” says the analyst.
The graph shows that there is a coincidence between the acceleration of the growth of the price of bitcoin (mustard line) in January 2020, with the steep change in whale numbers (blue line). These increased by 10% in a few days, reaching over 2,100.
Regarding the correction close to 22% and its subsequent recovery, reported by CriptoNoticias last Monday, January 11, the analyst affirms that after the price decline, this it is consolidating in a range between $ 30,000 and $ 42,000.
Sales intensity was higher than usual, due to the partial collapse of Coinbase with the delayed execution of purchase orders. This allowed the pressure of sales to dominate, while purchases were muted. The price on Coinbase was as much as $ 350 lower than other exchanges.
Woo explains that the Coinbase incident contained a significant part of the buying impulse. “As much of the latest price action is known through exchanges, the extent of heavy selling could not be predicted through capital movements on-chain», Says Woo.
Expected consolidation of bitcoin price
The aforementioned consolidation band is based on the strong buying momentum of the whales, says Woo. Then present one of their bitcoin price models, which has been successful “for 12 years, during the bull markets of bitcoin,” says the analyst. This model allows you to determine what you call the “floor price” of bitcoin.. This would be, according to Woo’s model, at USD 29,000.
The analyst clarifies that he is not convinced that the price can reach that level, but that traders should prepare for it, and consider it “the worst scenario”.
This model tells us that we are trading in a regime where a retracement can be contained in a range of 20% to 33% from the local highs (using the daily closing price of the candles).
The amount of coins that move among investors remains highWoo assures. While discreet buying impulses are normally observed, the month of January seems like a single big impulse, says the analyst, to the point that he has begun to call it “the mother of all impulses.”
The graph below shows the large transfers of BTC between investors below the bitcoin price curve.
The highest in the last year corresponds to the fall of the markets in March 2020, while the current one is seen at the same level as that of March, although successive peaks of BTC transfers are noted.
The large amounts of funds in the USDC stablecoin entering the exchanges, while the BTC comes out of these, it is a way to check the sales, explains Woo. “This is bullish and should provide more fuel for further gains once the consolidation is complete,” the analyst notes.
The report ends with a review of the Fibonacci price levels, to establish price targets. This analysis confirms that there is still room for BTC price growth, sustains Woo.
It also refers back to market participants who tend to trade their BTCs, in contrast to HODLers. This dynamic has already been explained by CriptoNoticias. Regarding the graph, the analyst comments that, usually, when a maximum in price is reached, BTC income tends to occur at the exchanges (green). Outgoing flows are indicated in red. Despite the most recent price increase, Woo highlights, there has been no significant revenue from BTC to the exchanges, which implies that large buyers are holding onto BTC.