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Despite the significant increase in the price of Bitcoin (BTC) in November, Bitcoin’s price is consolidating above $ 15,000and chain analyst Willy Woo says a price hike is unlikely for three main reasons.
The three factors are on the rise outflow of funds from exchanges, increase in “HODLers” and data showing that investors have already made a profit.
According to Coinmarketcap, Bitcoin’s market cap is currently $ 286,937,402,262.
Bitcoin is shifting from exchanges to individual wallets
According to data from Glassnode, a large amount of Bitcoin was leaving centralized exchanges in late October.
Woo says this metric is bullish because it shows investors are transferring funds from trading platforms to their personal wallets. This indicates it users view their BTC as a long-term investment strategy.
The analyst noticed this Bitcoin is the cryptocurrency that has shown the largest number of exits from exchanges in a single day over the past five years. He explained that:
“A ridiculous number of coins have been put into individual wallets. Looking at it from afar, putting it into perspective, the biggest one day move can be seen in this 5-year chart.”
The number of “HODLers” is increasing
In the cryptocurrency market, analysts refer to longtime Bitcoin holders as “HODLers”. That is, they are the ones who tend to hold BTC for long periods, often for more than a year.
Before Bitcoin’s strong rally that led to new multi-year highs began, Woo said it the number of Bitcoin HODLers was increasing significantly. Highest peak recorded since October 2017, which happened just a few months before the price of Bitcoin hit its all-time high in December. Woo noticed that:
“Before this pumping, the influx of new HODLers seen on the blockchain was skyrocketing. Again, it was skyrocketing, I’m not kidding. This amount of absorption was last seen in October 2017, which is a month before BTC. will enter its manic phase of 2017 “.
The high number of HODLers is an important metric because it shows the authentic retail demand behind the uptrend. A bullish rally in the price of Bitcoin could be vulnerable to a sharp decline if it is primarily driven by the futures market.
Less risk of a deep correction
The Bitcoin’s SOPR (Production Spent Profit) Index is an indicator that shows whether investors are profiting from unrealized profits.
Glassnode data shows that quite a large number of investors have benefited from this over the past week. This shows that the threat of a sharp reduction in profit taking is less because investors have already started making their profits while these coins were absorbed by the buyers of the market.
Based on the three data, Woo pointed this out he does not see that an explosion is about to happen. The term “blow-off top” refers to a technical training in which the the price of an asset drops dramatically after reaching a high resistance level. Court he wrote:
“Overall conclusion: no jump is expected. Pending the completion of a consolidation and therefore more bullish action.”
In the short term, the risk to Bitcoin’s current bullish rally remains the crowded derivatives market. So, analysts are expecting a consolidation but not a deep correction, at least for now.
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