A bullish consolidation above USD 50,000 should be complete at some point, Woo said. In less than three weeks, a consolidation phase would take the price of Bitcoin to a new bullish rally.
A recent report by analyst Willy Woo indicates that an increase in the demand for Bitcoin has mitigated the downside risk. The price of the pioneering cryptocurrency is currently at a discount compared to its current valuation due to that demand, the specialist states.
Woo expects price action to go from sideways movements to a clearly bullish scenario in 1 to 3 weeks. He predicts that Bitcoin would then attempt a bullish breakout of USD 50,000, but he is very confident that that resistance will give way again.
Considering the demand from investors, the Bitcoin valuation model has returned to a price range close to USD 55,000.
The Macro Cycle Points to 2022 Being a Bullish Year
There has been a massive accumulation of BTC by long-term holders in the last two months. That has been one of the most attractive aspects of Bitcoin’s on-chain structure, Woo said.
The specialist argues that long-term holders control the coins that have not moved for more than five months. Since currencies take a long time to establish that status, he believes that this metric would not be very suitable for the short term. However, he says that the analysis of the macro movements of the cycle reveals their strength.
A recent supply shock graph, corresponding to long-term holders, allows seeing the demand and supply of Bitcoin on a macro time scale. Woo noted that the rectangles indicate the zone of maximum accumulation, which leads to higher unavailability or a higher supply shock. He explained that the highs in the supply shock are usually related to a zone of a price rebound.
The Adoption Rates of Bitcoin Influence the Price
Although Woo does not specify the model that will replace Bitcoin’s four-year cycles, he suggests a random price discovery route might emerge. As in traditional markets, it would track the adoption on the network, which cycles of about ten years would eventually capture. In other words, the price of Bitcoin would not respond to predetermined patterns but would rather become more dependent on its adoption rates.
In the latest Bitcoin market newsletter, Woo changed the bearish outlook that he had reflected in his previous assessment. He had warned about incoming flows of BTC to exchanges, which increased sales pressure. New data from the analyst confirmed the trend of BTC flows leaving cryptocurrency exchanges and a more massive accumulation by long-term holders.
Bitcoin is trading at around USD 48,900 and has accumulated a 1.52% profit in the last 24 hours. In addition, the price has suffered a drop of 3.5% compared to the local maximum of USD 50,400. The market capitalization of the cryptocurrency is more than USD 920 billion at the time of writing this article, according to CoinGecko.
By Alexander Salazar
