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Sunday, July 14, 2024

The Bottom Is In On Bitcoin’s Latest Pullback, Says Willy Woo

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The price of Bitcoin (BTC) has likely already bottomed from a sharp pullback that followed new all-time highs last week, according to popular price analyst Willy Woo.

The analyst provided a list of “good news” and ”bad news” surrounding Bitcoin’s fundamentals on Thursday, comparing the asset’s recent consolidation to that of past bull market cycles.

Has Bitcoin Bottomed Yet?

Woo began with a look at Bitcoin’s Spent Output Profit Ratio (SOPR), an on-chain metric gauging 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 foreboding a lengthy consolidation period.

After tapping $74,000 last week, the asset slid back to $61,000 on Wednesday and has now slightly bounced back to $65,200. The 17% pullback is reminiscent of when Bitcoin broke all-time highs during its previous cycle, experiencing a 31% correction at the time.

“IMO this is typical of a freak out spaz before a pump, need to shake the weak hands,” wrote Woo.

Bitcoin’s “expected inflows” also appear to have bottomed – a measure of the market’s expected buying pressure based on Bitcoin’s 24-hour simple moving average.

Not all looks bullish, however: long interest is still built up within Bitcoin’s perpetual futures market, which still needs to draw down by 10% to 20% before returning to a normal range.

Woo noted that March has historically been a sideways trading month while April may get “choppy in both directions” based on present data. In the long term, he says macro structure “remains bullish.”

“Overall, it’s a patience game. The short-term consolidation bottom is probably in,” the analyst concluded. “There’s a chance we may consolidate right into the halvening which normally brings downward volatility.”

Bitcoin ETF Reversal

According to an on-chain analysis by CryptoQuant, Bitcoin miners have ramped up their BTC sales in recent months, taking profit following as the coin appreciates in value. Even short-term holders have started to take profit, mimicking patterns typically seen during previous cycle peaks.

Bitcoin spot ETFs in the United States have also seen an unprecedented wave of outflows this week, losing over $700 million in the past three days alone.

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