Following Profit-Taking, Bitcoin’s Price Heads to USD 56,000, According to Analyst Willy Woo
The analyst claims that most Bitcoin sales come from new traders. He notes that the current balance of Bitcoin on exchanges is at the lowest levels in two and a half years.
Willy Woo recently reiterated that the price of Bitcoin (BTC) has entered a consolidation phase of around USD 29,000. Besides, the renowned analyst updated the cap to USD 56,000, compared to an estimate of USD 42,000 that he had previously made.
Basing on in-chain data and his metrics, he said that the phase of profit-taking by the whales has concluded. Likewise, he said that the flow of incoming bitcoins on exchanges is lower than that of outgoing bitcoins. The analyst considers that these two factors confirm the validity of the current upward pace of Bitcoin.
On January 30th, Woo posted on his Twitter account a series of graphs that support his predictions. To begin with, he mentioned the metric that tracks earnings when there are sales of Bitcoin (Spent Output Profit Ratio or SOPR).
When that quotient reaches the value 1, it reflects that the sale of Bitcoin occurs at the same acquisition price. According to Woo, when it is below 1, the sale would generate losses. A pronounced bearish phase would be necessary to sell below that value, clarifies the analyst. However, he reiterated that he does not contemplate that scenario at the moment.
Woo also referred to the growth in the number of new Bitcoin users. He spoke of “new entities” as it is the absolute growth in the number of addresses, which were around 25,000 in January. Although a user may have several addresses, a notable increase in their number also implies a similar increase in the number of users.
“There is an indication of the huge number of users entering the Bitcoin market, even in this consolidation phase. The number of new users arriving daily is higher than at any other time in this bullish market,” Woo explained.
Through another graph, the trader showed the flows of incoming and outgoing bitcoins on exchanges up to January 29th. It is possible to see that a large number of bitcoins left exchanges daily that month, which was up to around 200,000 BTC. The occasional spikes in the number of bitcoins entering exchanges are minimal, compared to those leaving.
The dominance of outgoing flows in 2020 differs from that of the 2017-2018 and 2019 bullish cycles. In the latter, incoming flows dominated, and it was hardly possible to reach the maximum price.
Glassnode states on Twitter that the supply of Bitcoin on exchanges is at its lowest level in two and a half years. From 3 million BTC in early 2020, it went down to less than 2.4 million today. In his last market newsletter, Willy Woo set a Bitcoin price consolidation band between USD 29,000 and USD 42,000. He predicted a breakout above USD 42,000 but now says that that cap has risen.