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Despite Bitcoin (BTC) strong rally in November, the price is consolidating above $ 15,000 as an on-chain analyst Willy Woo says a top blow-off is unlikely to be for three main reasons.
The three factors are the growing outflow of funds from exchanges, the increase in “HODLers” and data showing that investors have already made profits.
Bitcoin is shifting from exchanges to individual wallets
According to data from Glassnode, a large amount of Bitcoin was moved out of centralized exchanges in late October.
Woo says this metric is optimistic because it shows investors are transferring funds from trading platforms to personal wallets. This indicates that users are holding their BTC with a long-term investment strategy.
The analyst noted that Bitcoin has seen the largest number of Bitcoins moved out of exchanges in a single day over the past five years. He explained:
“A ridiculous amount of coins have been collected and transferred to individual wallets. Zooming out, putting it into perspective, is the biggest one-day gain on this 5-year chart.
The number of “HODLers” is increasing
In the cryptocurrency market, analysts refer to longtime Bitcoin holders as “HODLers”. They tend to hold BTC for extended periods, often for over a year.
Before the strong Bitcoin rally that led to new multi-year highs began, Woo said the number of Bitcoin HODLers was significantly increasing. It recorded its biggest peak since October 2017, which was just a few months before BTC hit its all-time high in December. Woo noted:
“Before this pump, the influx of new HODLers seen on the blockchain was skyrocketing. I repeat, through the roof, I’m not kidding. This absorption dimension was last observed in October 2017; it’s been a month. before BTC entered its manic phase of 2017. “
The high number of HODLers is an important metric because it shows real retail demand behind the uptrend. A BTC rally could become vulnerable to a major pullback if it is primarily driven by the futures market.
Less risk of deep correction
The Bitcoin Spent Output Profit Ratio (SOPR) is an indicator that shows whether investors are making profits on unrealized profits.
Data from Glassnode shows that quite a large number of investors have made profits over the past week. This shows that the threat of a major withdrawal of profit taking is less because investors have already started making their profits as these coins have been absorbed by the market buyers.
Based on the three data points, Woo pointed out that he doesn’t see an outbreak occurring. The term blow-off top refers to a technical formation in which the price of an asset falls rapidly after reaching a heavy resistance level. Court he wrote:
“Overall conclusion: I was not expecting a hit to the top. Waiting for the completion of a consolidation, so a more bullish action.”
In the short term, the risk to Bitcoin’s ongoing rally remains the overcrowded derivatives market. Therefore, analysts expect a consolidation but not a deep correction, at least for now.
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