Stablecoins are near the all-time high and are accumulating and waiting to return to Bitcoin. The waves of Bitcoin (BTC) hitting exchanges to find a sale have subsided.
Analyst Willy Woo, after he reviewed the metrics of the Bitcoin blockchain, concluded that the cryptocurrency remains in a bull market and there are chances of a speedy recovery in its price, reaching an all-time high by the end of this year.
In issue no. 20 of the Bitcoin Forecast, released on June 2, Woo finds that Bitcoin is oversold relative to its fundamental price. According to Woo, the on-chain data highlights that the price of BTC will rebound and move to higher prices in the latter part of this year.
He also expects a quick recovery from $ 55,000 to $ 65,000 within 4-6 weeks. He adds that downside risk is limited, as we are in a region where BTC is facing a heavy oversell, which is relative to the fundamental price.
Users Keep Increasing their Numbers
Woo’s on-chain analysis shows that the number of Bitcoin users keeps rising, even in the face of decaying prices. It clarifies that a key indicator of a bear market is that user growth begins to slow.
This has been true for all bull markets in the history of Bitcoin; These end when there are no new buyers to sustain the higher prices. At the moment, the on-chain data shows that people are still buying.
Lots of Money on the Sidelines Ready to go in with Stablecoins
When Bitcoin meets a sale there are two options. The first is to return to fiat currencies through banking routes, which needs a more complex and structured process; the second is to purchase stable coins. This last option usually serves for those who want to protect themselves from the price drop but who intend to be ready to purchase bitcoin again quickly and more easily.
A decline in the stable coin supply ratio (SSR) shows an expansion in the stable coin supply relative to the size of Bitcoin. That is a large amount of digital USD with a necessity to buy Bitcoin.
Woo explains that the drop indicates better use of stable coins and is currently close to an all-time high. Which indicates a typical bottom zone of the market. He clarifies that this does not exclude that the price may fall short, but it does suggest that the disadvantage is not too big in comparison to historical norms.
The analysis shows that the waves of BTC coming to exchanges to be sold have slowed, which indicates that fewer people are interested in selling. If the decrease in volatility joins the situation, then users could be experiencing a price decline near the bottom.
Bitcoin: It is Time to Payback
Woo explains that in the modern era of BTC there have been three crashes of around 50%. The first, when the capitulation at the end of the bear market of 2018. The second, with the impact of the white swan of COVID19; the third would be the current correction.
Using Glassnode’s liquid supply change metric (in the graph below), we can see the currencies moving between strong hands (long-term investors that don’t sell much) and weak hands (speculative forks that buy and sell).
By: Jenson Nuñez