|

Bitcoin bull market 'still halfway' after $30K BTC price crash destroys leverage

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.

Chart

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.

Chart

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."

Author

Cointelegraph Team

Cointelegraph Team

Cointelegraph

We are privileged enough to work with the best and brightest in Bitcoin.

More from Cointelegraph Team
Share:

Editor's Picks

Crypto Today: Bitcoin, Ethereum, XRP recovery slows amid incessant capital outflows

The cryptocurrency remains in a broader corrective bias on Friday, despite majors such as Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) holding slightly higher than early-week support levels.

Cardano: Whale selling, cautious derivatives limit ADA rebound

Cardano is trading near $0.170 at the time of writing on Friday after staging a modest rebound from last week's sharp correction. However, the recovery remains fragile as large holders have resumed reducing their positions, adding fresh selling pressure to ADA.

Experts agree: Bitcoin nears bottom, but weak demand raises doubts

Bitcoin (BTC) is trading above $63,000 at the time of writing on Friday after rebounding from the key 200-week Simple Moving Average (SMA) near $62,000, a level widely viewed as key long-term support.

Pi Network Price Forecast: Bulls attempt comeback as bearish strength fades

Pi Network is trading at around $0.120 on Friday after a modest recovery the previous day. Despite this recent rebound, traders should be cautious as a scheduled unlock of 14.8 million PI tokens on Friday could limit the token's recovery potential by increasing market supply.

Experts agree: Bitcoin nears bottom, but weak demand raises doubts
Bitcoin (BTC) is trading above $63,000 at the time of writing on Friday after rebounding from the key 200-week Simple Moving Average (SMA) near $62,000, a level widely viewed as key long-term support. The recovery may suggest that Bitcoin has found a floor after a sharp correction that spanned more than a month, but some warning signs persist.