The classic end of a Bitcoin bull run, a "mania top," has not appeared yet, while fundamentals are unchanged in their outlook, says Willy Woo.
Bitcoin (BTC) is still "halfway" through its current bull market and this week's price dip turned out to be a "win" for hodlers, according to on-chain analyst Willy Woo.
In the latest edition of his market updates which he made publicly accessible, the popular statistician outlined multiple factors which all suggest that Bitcoin is anything but bearish.
Woo: BTC price did not reach "mania top"
BTC/USD recovered strongly after hitting lows of $30,000 on Wednesday, preserving its gains after the sharpest recovery in its history.
"Are we in a bull market? Long range macro indicators like NVT ratio are very healthy, that remains unchanged," Woo wrote.
"So yes, this is not a mania top which all BTC bull markets end in, price is BELOW fundamentals, not above it. We are still halfway."
NVT, or network value to transaction ratio, is a popular metric which aims at identifying profitability among hodlers. As Cointelegraph reported earlier this week, even before the dip, NVT was signalling a buying opportunity at price levels around $42,000.
NVT price, which Woo calls an "organic" valuation of Bitcoin, still lies at $55,000, which along with stock-to-flow based projections of $60,000 suggests that BTC/USD is considerably undervalued.
The largest cryptocurrency may already have the tools it needs to regain its lost ground — thanks to a shakeout of leveraged traders and the now muted effects of Elon Musk tweeting negative comments.
In fact, the dip may have been just what Bitcoin needed.
"Newish whales dumped out, retail bought a chunk of the dip, coins getting more distributed, I'll take that as a win," Woo added.
Bitcoin funding rates history. Source: Bybt.com
Notably, the sharp drop to $30,000 resulted in Bitcoin funding rates flipping negative across the board to record lows, which could provide fuel for a massive short squeeze.
"That cleanse set up Bitcoin for $100k. Funding rates largely reset," commented Messari analyst Mira Christanto on the latest Bitcoin funding rate data. She added:
"The shakeout before the breakout."
$4 billion irrational trades disappear
On the topic of a trader shakeout, fresh data from Glassnode shows just how much leverage was flushed from the market on the to $30,000 and back to $40,000.
Over the course of the day, open interest in Bitcoin futures fell from above $17 billion to below $13 billion and stayed at those levels.
"Goodbye leverage," analyst William Clemente commented on the figures.
Bitcoin futures open interest chart. Source: William Clemente/ Twitter
For new buyers entering the space, Blockstream CEO Adam Back meanwhile had some cautionary words.
"Thoughts on leverage. *don't*!" he summarized in a series of tweets.
"Better just hodl, dca, cold store. if you're gonna use leverage for fun/profit, you're increasing risk a lot. do it with max 10% of coins (or less). never place a leverage trade without a limit stop or implicit stop from small position liquidation."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.
Recommended Content
Editors’ Picks
Is Altcoin Season here as Bitcoin reaches a new all-time high?
Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.
Shanghai court confirms legal recognition of crypto ownership
A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.
BTC hits an all-time high above $97,850, inches away from the $100K mark
Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Bitcoin: New high of $100K or correction to $78K?
Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.