Most "natural" bitcoin pumps for years – merchants clarify why a blow-off prime is unlikely
Despite Bitcoin's (BTC) steep rally in November, the price is consolidating above $ 15,000 as an on-chain analyst. According to Willy Woo, a blow-off top is unlikely for three main reasons.
The three factors are the growing outflow of funds from exchanges, the increase in “HODLers” and data showing that investors have already taken profits.
Bitcoin switches from exchanges to individual wallets
According to Glassnode, a large amount of Bitcoin moved out of the central exchanges in late October.
According to Woo, this metric is bullish as it shows investors are transferring funds from trading platforms to personal wallets. This indicates that users are keeping their BTC with a long term investment strategy.
Net flow of Bitcoin on exchanges. Source: Glassnode
The analyst noted that Bitcoin took the highest number of Bitcoin off the exchanges in a single day in the past five years. He explained:
“A ridiculous amount of coins has been scooped up and put in individual purses. If you zoom out and put that into perspective, it is the biggest one-day gain on this 5-year chart. "
The number of "HODLers" is increasing
In the cryptocurrency market, analysts refer to longtime Bitcoin owners as "HODLers". They tend to hold onto BTC for long periods of time, often over a year.
Before the steep Bitcoin rally began that led to new multi-year highs, Woo said the number of Bitcoin HODLers had increased significantly. It saw the biggest surge since October 2017, just months before BTC hit its all-time high in December. Woo noted:
“In front of this pump, the influx of new HODLers that could be seen on the blockchain went through the roof. Repeat, through the roof, I'm not kidding. This size shot was last seen in October 2017; That was a month before BTC entered the mania stage in 2017. "
The high number of HODLers is an important metric as it shows the real retail demand behind the uptrend. A BTC rally could become prone to a major retreat if it is mainly led by the futures market.
Lower risk of depth correction
The Bitcoin Spent Output Profit Ratio (SOPR) is an indicator that shows whether investors are making profits on their unrealized gains.
Glassnode data shows that a relatively large number of investors took profits over the past week. This shows that there is less chance of a significant drop in profits as investors have already started to realize their profits as these coins have been absorbed by the market buyers.
Bitcoin SOPR indicator. Source: Glassnode
Based on the three data points, Woo emphasized that he did not see any blow off from above. The term blow-off top refers to a technical formation where the price of an asset drops sharply after reaching a high level of resistance. Woo wrote:
“Overall conclusion: I don't expect a discount. Waiting for a consolidation to complete, then for more bullish action. "
In the short term, the risk to the ongoing Bitcoin rally remains the crowded derivatives market. Therefore, analysts expect a certain consolidation, at least for the time being, but not a profound correction.