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Bitcoin reaches $29k ‘floor-price’; Where is the next rally headed?

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Bitcoin reached its new-all time high of $42,000 on the 8th of January. The exhilaration associated with the massive bullish was high and certain proponents expected the price to move above $55,000 by the end of Q1 2020. However, after its 2nd re-test at $40,000 on the 14th of January, BTC dropped all the way down below $30,000 over the past day. While the prices may have gone the $30k margin at press time, Bitcoin might be entertaining a radical shift in the market.

Bitcoin loses $36.5k and $33k resistance

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Source: Trading View

According to the analysis, BTC dropped down to $28,880, leading to a 31% drop since the new all-time high value. In doing so, Bitcoin failed to uphold its position over a couple of important support/resistance.

During the past week, BTC struggled to position itself above $36.5k, and over the past 48-hours, the asset has dropped below $33k as well. After dropping down to $29,000, many expected the price to attain another bullish rally, but it is far from certain as on-chain metrics indicated a different scenario.

Willy Woo suggested $29,000 as Bitcoin floor price

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Source: Twitter

Last week, popular on-chain analyst Willy Woo suggested that the reset for the Bitcoin SOPR chart is likely to be followed by a price correction that will shake out weak hands off the market. In terms of finding a bottom, Woo indicated that the worst-case scenario would entertain BTC at a ‘floor price’ of $29,000.

His prediction has held true at press time, but Woo added that even after the asset drops down to $29,000, Bitcoin will rally right back up. Capital injection from HODLers has been strong, considering it has been a Whale Cycle.

Is the bottom definitely in?

According to the CryptoQuant CEO, it might not be the case. In a recent Twitter thread, Ki-Young Ju brought attention to the current Coinbase Premium. The analyst believed that whenever BTC has breached a fundamental resistance like $20k or $30k in the past, huge spot inflows from high net individuals have been observed.

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Source: Twitter

Right now, the investors appeared to under a selling spree and there was not enough premium at press time. It is also important to consider that, Bitcoin’s longs and shorts contract have largely neutralized, indicating a drop in interest from the derivatives market.

Verdict

From a market structure prespective, for Bitcoin to maintain a bullish momentum, its consolidation above $31.5k-$32k would be essential in the next 48 hours. However, failure to do so would improve the possibility for another bearish leg down, as Bitcoin may retrace down to $25,000 in the charts.

Bitcoin Analyst Criticizes Coinbase For Triggering ‘Bearish Havoc’

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Bitcoin’s volatility has heated up and it is not just investors that are having trouble keeping up with the abrupt trends of the market. Several leading cryptocurrency exchanges such as Coinbase has transaction delays. But this time around, it is even more damaging.

Coinbase Causes Bearish Havoc

Many prominent individuals of the crypto space have been voicing out concerns for the platform. The latest one to do so was the famous Statistician and on-chain crypto analyst, Willy Woo who said that buys on Coinbase were not completing which led its to price $350 lower than other cryptocurrency exchanges.

He further noted that the platform failed to exhibit buying demand since buys were not being registered. This, in turn, pulled down the index price that futures exchanges utilize to calculate leverage funding, which triggered “bearish havoc” on speculative markets.

“Coinbase price is used in a basket of exchange prices to get an index price that futures markets trade on. Gives a false bearish signal to algos, which will trigger further sell-off.”

What is even more interesting is that Coinbase registered a record daily volume of nearly $10 billion on the 11th of January. To put things into perspective, the figure is more than the total volume for Q1 2019. In fact, yesterday’s trading volume was also larger than the total volume for January last year.

It can be safely said that Coinbase has experienced astonishing growth this bull run especially at a time when the platform was busy preparing to make its stock market debut.

However, the latest news was a setback for the exchange. As Woo explained, the latest pullback in the Bitcoin and the crypto market started on spot markets, which was then greatly amplified by a single exchange “partially failing”.

The market’s recent touchdown was unlike its previous crashes in the past 2 years, where over-leveraged markets lead by trader liquidation.

This isn’t the first time that the customers voiced their displeasure about technical difficulties on Coinbase that impeded activity at the platform, as it prevented them from taking advantage of the market activity.

Co-founder and CEO of Blockstream, Adam Back also commented,

“sheesh. Brain Armstrong, you’ve got to get a handle on this stuff. First, the continual crashing under load for weeks. Now, this. it costs people money. I had a leverage long liquidation myself, which this may have contributed to. (reopened with small slippage, but still).”

Here Why Bitcoin’s Rally Is Far From Done

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Bitcoin’s price has been rallying and hitting milestones with each passing day. And this trend is in no mood to stop anytime soon. As noted by Bitcoin proponent and famous statistician Willy Woo the buying has been driven by market participants who are long-term holders of the crypto-asset.

He further added,

“This is bullish, this rally is far from done. This is the change in Bitcoin’s supply moving between participants. When more coins move from liquid (active traders) to the illiquid (HODLers), it’s bullish.”

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As prices soared, the anticipation for a significant correction in the crypto-asset’s continued to lurk. Factors such as the present market momentum as well as the participation from key institutional players are important. Hence, the coin could potentially be able to hold its price above the $30,000-level which has turned out to be crucial support for the coin.

Its market cap only recently soared above $600 billion for the very first time. While it may seem like Bitcoin was accelerating at a much faster pace than it did in 2017, there’s is more to the actual trend. In fact, the chart below depicted that it had a long way to go to reach the records established back in 2013 and 2017 with regards to rapid increases.

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Scenarios for Bitcoin Dump Less Likely

Owing to the rapid institutionalization, the coin’s current cycle has seen massive volume than any other bull cycles in the past 12 years of its existence.

Moreover, the bullish outlook can be further be backed by the Bitcoin Network Momentum chart, which shows that the crypto-asset’s network momentum is still at the time the same level as it was back in late 2020. This essentially signaled that a massive case of liquidation event which followed overflow of sell orders on exchanges seen back in 2018 or last year’s Black Thursday crash may not repeat this year.

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Adding to this was Glassnode’s latest analysis in which it claimed that 78% of the Bitcoin supply was not liquid. In which case, a supply-side crisis materializes which, in turn, weakens the crypto-asset’s selling pressure in the market. Hence, a sustained rise of illiquid Bitcoin demonstrates an indication of strong investor hodling sentiment and a potentially bullish signal.

Will Bitcoin’s Powerful Re-accumulation Help Crack $30K?

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After a fresh rally right after a Christmas-pullback, Bitcoin continued registering new all-time highs and was now nearing $30,000. Thanks to the latest re-accumulation phase, the ongoing bullish momentum has managed to drive the world’s largest cryptocurrency to new highs every week.

Bitcoin’s Retail Crowd Makes A Comeback?

On a similar note, popular Statistician and On-chain analyst, Willy Woo, pointed out that inventory depletion on spot exchanges had halted which was indicative that a “re-accumulation phase” of this macrocycle was likely to complete.

This can be noted in the Spot inventory data provided by the crypto-analytic platform, Glassnode attached below. He further noted, that if the present cycle mimics the last, then inventory on cryptocurrency exchanges would increase here on in as retail starts entering in large numbers, attracted by the price appreciation.

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Woo further went on to explain that unlike big institutional players, the retail investor tends to store more of their coins on exchanges which accounts for the inventory climb later in the cycle. He further noted,

“This re-accumulation phase was 2x more powerful than the last cycle. It took 2x longer to complete and the depletion was 2x deeper. Very bullish.”

In addition, the entry of retail could also boost the altcoin party to finally catch up to the bullish movement similar to the 2017 scenario during which several coins including some lesser-known tokens went on to post massive rallies and subsequent ATHs.

In fact, Co-founder and CEO of Blockstream, Adam Back, also opined that the retail investors have finally gotten aboard and pushed the coin’s price even higher this time in addition to the institutional crowd. Back further commented,

“That’s the sound of retail front-running institutions. It takes weeks-months for institutional to get into a new asset class. They need approvals, accounting, and corp tax planning advice, maybe board and/or shareholder approval. Public market companies worse. Hedge funds easier.”

It is also important to note that the significant appreciation in Bitcoin’s price during Christmas can be mainly attributed to the retail traders since traditional markets remained closed. With this for the time ever, the combined value of all the Bitcoin tokens in circulation has surpassed half a trillion USD i.e., $500 billion.

Despite healthy corrections, Bitcoin could act as a potential inflation hedge as noted by many industry experts in the coming years.

$200k Per Bitcoin By End Of 2021 Looks Conservative, Says Willy Woo

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All eyes are in Bitcoin now. Its wild upward swings have given rise to wild predictions as well. This time, it is the popular on-chain analysts and Bitcoin advocate, Willy Woo, who weighed on how the cryptocurrency’s prospects for 2021 looks like.

In a series of tweets, Woo went on to say that his “top model” indicated that BTC is all set to hit $200k by the end of 2021. The cryptocurrency reaching $300k was also “not out of question”. He also said,

“The current market on average paid $7456 for their coins. You all are geniuses.”

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Bitcoin’s Current Rising Optimism Outpaces Previous Cycles

While adding that he has never been so bullish for 2021, Woo further discussed Bitcoin maintaining a consistent upward trajectory. The latest accumulation phase driven by both retail and institutional investors cannot be undermined and as the statistician noted, this trend coincided with spot market inventory depletion roughly 2x longer and deeper than the last cycle. It will send BTC.

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Delivering the prediction, Woo asserted that the dollar gain in market cap per dollar invested has substantially surged over past cycles, depicting that the Bitcoin ‘HODLers’ were more optimistic this time than the previous bull runs.

“It was $2.00 in the 2013 bull run, $2.50 in 2017, and $3.50 or more for 2021.  This  pointing to reflexivity increasing; an amplified 2021 bullish feedback loop.”

Bitcoin was currently trading at $18,932 after a decline of 2.55% over the past day. After surpassing the major hurdle and hitting above the previously achieved ATH, Bitcoin retraced in a massive market-wide pullback.

Several bold price predictions have made their way over the past few months as BTC’s prominence rose. Many ardent advocates of the cryptocurrency appeared to be taking a victory lap after a tryst with a  fresh peak of nearly $20k.

Many institutions have publicly revealed purchasing a huge pile of Bitcoins this year. To top that, many reports have surfaced during the same time that a few big banks have been looking for ways to make money from Bitcoin without handling it directly. The emerging narrative that the world’s largest cryptocurrency was becoming one of the preferred options for the traditional finance companies is a positive indicator which could bolster its price to finally meet at least one of the sky-high price prediction.

 

Over 500K Bitcoin outflows in 2020; BTC Hodling Re-Defined?

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2020 has been an exceptional year for Bitcoin, but there have been some drastic changes over time. Data collected from Arcane Research indicated that between 15 March and 5 November, 560,428 BTCs had exited exchanges, resulting in the largest net outflow for collective platforms.

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The aggregated BTC exchange balance has decreased by 2.4 million for the first time since August 2018. While the circulating supply in the industry has increased by 1.3 million since 2018, more and more users are currently taking their assets out of these centralized platforms. The report added,

“The exchange balance is currently at its lowest since February 4th 2018.”

Strong Price Action and Impact on Bitcoin Hodling

The first incident of high exchange outflow was witnessed back in March 2020, when BTC’s price collapsed below $4000. While the price has recovered significantly over the past few months, the net outflow has only increased. The popular inference drawn from such a drastic turnaround has been that users are currently unwilling to sell their assets. Bitcoin‘s price performance after a difficult economic period during the pandemic has re-ignited a sense of trust in the asset.

Bitcoin hodlers and the holding sentiment has only improved with the increasing valuation, and it was speculated that users were possibly moving their assets to cold storage or maybe shifting them to Ethereum.

According to Willy-Woo, the reasons for high BTC outflows went beyond the simple case of Hodling. The analyst had suggested that Bitcoin’s safe haven narrative had received a new wave of interest.

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During the economic uncertainty in mid-year, investors were moving into BTC and it led to the increased in NVT, which is Bitcoin’s network value. The investment velocity also picked up the pace and suddenly traders were accumulating even after it had crossed the $10,000 mark in May. Woo stated,

“The fundamentals of BTC became visibly bullish over the COVID correction, this was hidden by traders freaking out and being liquidated. Bitcoin is only now reflecting its organic valuation.”

Massive Institutional BTC Open-Interest paved higher HODLing sentiment

During last month’s rally, CME‘s OI registered its all-time high Open-Interest which indicated that rising involvement of institutions as well. With retail already jumping on the bandwagon, institutions were becoming more forthcoming with Bitcoin as well, and MicroStrategy’s $426 million investment is a great example.

With the sentiment surrounding BTC becoming inevitably bullish for 2021, we might see HODLing increase for the next few months. Such levels of accumulation have not been witnessed before in Bitcoin’s history and it truly marks the start of a new generation of wealth distribution with Bitcoin.