The current consolidation band marks the midpoint of the bullish run, says cryptocurrency analyst and forecaster Woo. The speculation in Bitcoin derivatives has decreased due to the settlements that took place three weeks ago.
Renowned cryptocurrency analyst Willy Woo recently predicted that the flow of BTC on exchanges will change from predominantly inbound to outbound. The purchase of the pioneering cryptocurrency is becoming stronger as it is increasingly moving towards large holders, according to Woo.
“There is also a decent chance that capital will start moving from altcoins towards Bitcoin in the next few weeks. Bitcoin is undervalued at US 58,000, according to on-chain value metrics,” said Willy Woo.
The analyst explained this through the NVT metric, that is, the market capitalization divided by the daily trading volume of BTC. Woo stated that BTC is undervalued as the network could have very organic valuation levels and a very low premium in the price. “We have not seen a scenario like this since October 2020. Bitcoin is so cheap at the moment,” the analyst stressed.
Besides, the floor price for the main cryptocurrency on the market, which long-term investors support, stands at USD 52,000 and is increasing steadily, Willy Woo argued.
The Current Situation in the Bitcoin Derivatives Markets
The analyst considers that the Bitcoin derivatives markets have cooled as “speculators have not yet entered significant trading volumes.” Woo said that this situation is “most likely due to the period of recovery from the substantial losses occurring three weeks ago.” At that moment, there were settlements of around USD 5 billion worth of BTC.
He argued that the recovery seen in Bitcoin derivatives markets comes from spot investors who are buying. Woo highlighted that there is currently little speculative premium.
It is possible to see a sustained decline in Bitcoin futures contracts in the graph from mid-April.
Net Flow of BTC on Exchanges Changes from Predominantly Inbound to Outbound
The flow of BTC to exchanges, which showed bearish signs, led to the sales at a time when the price was falling. However, that situation has already stopped, according to Woo.
The cryptocurrency analyst explained that the net flow has changed into a bullish scenario, that is, the predominantly outbound flow resumes.
The Flow of BTC to Large Holders Resume
During this extended period of consolidation, Bitcoin has been moving towards big holders, Woo stated. “We certainly observed a weakly bearish period in the last three weeks; however, the trend is moving into bullish territory again,” Woo said.
Woo observed that altcoins have been in a bullish period, called “altcoin season”, since March. This has contributed to the loss of dominance of Satoshi Nakamoto’s cryptocurrency. At the time of writing this article, the dominance of Bitcoin is at 44.38%, its lowest level of the year, according to CoinMarketCap. The analyst said that “we are going through a zone of high probability for this trend to reverse in the coming weeks.”
By Alexander Salazar