The Black Thursday of March 2020 triggered falls for bitcoin and the S&P 500. With the situation of Evergrande in China, the S&P 500 fell 4%, and BTC was down 23%.
Speculative sales of bitcoin last week, strongly related to the default of the Chinese real estate company Evergrande, were out of proportions, according to the analyst of the market of bitcoin (BTC) Willy Woo.
In his latest prediction, Woo insists that despite last week’s BTC price drop, the buildup has continued, especially by holders who have little disposition to sell.
At the beginning of the week, when the Chinese real estate firm Evergrande went into default, the price of bitcoin crumbled down along with the indices that track traditional assets.
In his analysis of the bitcoin market, Woo pays more attention to the fact that in general market downturns, the decay in the appreciation of bitcoin was in a range comparable to the decline in traditional stocks.
While in March 2020, the decline in BTC appeared to be more pronounced than that of the S&P 500; both setbacks were just double digits. Willy Woo also clarified this September that, while BTC presents 23% of deterioration, the S&P 500 index crumbled down only 4%. According to Woo, even at first glance, this seems like an overreaction from BTC speculators.
Bitcoin Fundamentals Remain Healthy
The analyst expresses that, in March 2020, there were moderate sales by long-term investors. The supply shock levels (similar to the unavailability of BTC for sale)reflect on exchanges and about short and long-term holders. The decline of those three numbers in March 2020 implies more BTC available for sale.
In this last bitcoin price bearish stage in September, the supply shock has reached a high peak in all three cases mentioned: that means less BTC on exchanges and more BTC in the hands of short- and long-term holders.
Last Friday, after the declaration of the People’s Bank of China and its bans all operations with cryptocurrencies, the price of BTC fell 8.9%, to USD 41,108, to then get back slightly and fluctuate around at USD 42,000.
There Are Bullish signs in BTC Movements
The trend of currency movement among investors appears to be going toward what Woo calls “a perfect setup for a bullish breakout.” The analyst highlights that he has been working on a new chart that works with three types of holders: strong, intermediate, and weak.
The strength of each category plots against the others, while the coins fluctuate between the holders. The BTC is in the hands of solid holders at maximum and gets retained by medium holders and weak holders at a minimum value.
When the historical maximum of the price of BTC occurs, in mid-April, this scenario takes effect. This taking of profits affects strong holders and leads them to decrease their retained BTC.
This fact preceded the zone of high sales in May, in which the bullish configuration gets reversed, and the price falls significantly. Strong holders put their coins for sale, so these coins pass into the hands of the other two categories.
At present, weak holders are at a minimum and what is retained by medium holders is decreasing, while strong holders gain dominance again. This situation leads Woo to predict a bullish breakout within one to two weeks.
By: Jenson Nuñez