Key facts:
Increased demand is due to long-term holders and speculative movements.
The outgoing flows of BTC from the exchanges coincide with the incoming flows of USDC.
The bitcoin (BTC) market would be in the final phase of a consolidation process, while an increase in demand from speculative holders and traders could fuel a bullish breakout in two weeks, says well-known analyst Willy Woo in his most recent market bulletin.
While bitcoin was previously oversold, the consolidation process in recent weeks has been healthy, states the analysis. “In the meantime, we have detected significant whale activity, suggesting significant price action in the short term,” he says.
In the previous analysis, a maximum in accumulation levels by long-term holders (LTH) had been highlighted. In recent days, a decrease in BTC has been detected in the hands of that segment of holders, as can be seen in the following graph.
There was a peak in the level of bitcoin accumulation by LTHs. Source: charts.woobul.com.
Historical data favor the thesis of the occurrence of a rally after the maximum accumulation occurs.
I keep watching this closely. Once the graph below exits the green zone or “accumulation peak”, historically a strong rally begins, but also the countdown to the end of that rally begins. When this happens, we will get clues about what can happen over the next 3-6 months. It is still too early to read, but there are strong indications that the macro environment for BTC is bullish for the next few months.
Willy Woo, Bitcoin Market Analyst.
Bitcoin is not oversold and demand is increasing
BTC is lateralizing, but demand has boomed. Source: charts.woobul.com.
While the price action has remained sideways, the demand for bitcoin has been growing, both by speculative traders and holders, notes the analysis. “It is a very healthy outlook. If you remember, the price rose in anticipation of the launch of the bitcoin ETFs, which beat the trend set by the fundamentals, ”Woo notes. However, he clarifies that investors have now covered that gap, so bitcoin would no longer be oversold.
Moderate BTC Traded Volumes
The NVT metric, which measures the traded volume of BTC in relation to its market value, is one more example of how the market has “cooled down”says Woo.
In the following graph it can be seen that the NVT signal is in the middle band, which would indicate that we are in a “not overheated region”, according to the analysis.
A drop in NVT signals a price boom if demand is healthy. Source: charts.woobul.com.
Rallies during bull markets generally start from this middle band. “Historically, we only fall below the mid-zone during market downturns; but there is little danger of this happening at this time, due to strong investor demand. ‘
The outgoing flows of BTC from exchanges
The trend of the outgoing flows of BTC from exchanges has been maintained, while the flow of the stablecoin USDC to them has strengthened, according to the analysis.
As BTC leaves the exchanges, the incoming flow of USDC increases. Source: charts.woobul.com.
This scenario, which was also present in Woo’s previous analysis, confirms the classic pattern of BTC purchases, the study asserts. The following graph shows another aspect of purchases by long-term holders: the heat map of bitcoin trading.
LTH trading map. Source: charts.woobul.com.
Red circles denote sales and blue circles indicate sales. Although they are not of great magnitude, blue circles predominate.
Bitcoin whales on the move
To the entire bullish scenario described, the analysis refers to some detected trading movements between bitcoin whales.
Whale trading heat map. Source: charts.woobul.com.
This graph shows recent movements of both buying and selling by whales, although purchases predominate. “I would describe this as preparing the whales for times to come, this often happens before major price movements,” the study highlights.
In coincidence with the upward trends mentioned in the study, exchanges’ BTC inventories have continued their downward race since March 2020, as reported by CryptoNews. From 3.14 million BTC, the balance has fallen by 22% in 19 months, and is at the same level as August 2018.
On the other hand, a Glassnode study, commented on November 3 by this medium, affirms that the market is going through a phase of moderate profit taking, which historically has preceded an upward break.
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