According to well-known analyst Willy Woo, Bitcoin (BTC) has just begun its regrouping phase.
This means that the bottom of the cycle has most likely been reached, and “smart money” is expected to flow into the cryptocurrency market.
Willy Woo tweeted recently A series of macro charts for Bitcoin, which shows the current state of the cryptocurrency market. They reveal how the BTC market is gaining momentum, leaving the area historically associated with the end of a bear market. Interestingly, the relatively high stability of the BTC price over the past few weeks suggests that a move even to the $40,000 region may be in the cards.
Willie Woo suggests beginning reaccumulation
The main chart that Willy Woo is referring to is the so-called Bitcoin Macro Indicator. The value of this indicator just broke above the lower blue line. According to the Pioneer of on-chain analysis In previous market cycles, this marked the beginning of the re-accumulation phase.
This market phase is mainly characterized by a slight sideways/bullish trend with many corrections still to come. It usually lasts a little more than a year and is a period when seasoned investors (“smart money”) join the cryptocurrency market. Moreover, the BTC price does not produce more macro bottoms, and volatility stabilizes, laying the foundations for a future bull market.
Short term holders lose the entry point
The second chart shows the cost basis ratio for bitcoin holders in the short and long term. Willie Woo points out that “bottoms are indicated when the short-term holders (new buyers) are cheaper than the long-term holders”. In the chart below, this corresponds to the red and pink areas.
During these rare periods, the cost base for short term holders (red line) is lower than that for long term holders (blue line). This means that the buying price of BTC for new investors is lower than the price paid by long-term holders. Therefore, this is only possible after significant declines in a long-term bear market.
It is worth noting that in the previous analysis of this index in September 2022, the cost base for short-term investors was only lower than that of long-term investors. At the time, this foreshadowed that the BTC price bottom had not been reached in this cycle. This was also the case, as Bitcoin reached a macro bottom in November at $15,476. However, now – with the opposite sign – Willy Woo notes that the buying window for short-term investors has expired:
“We are now getting out of this system.”
Short-term stability in the price of Bitcoin could lead to $40,000
Finally, in his final argument, Willie Woo put the two schemes side by side. The first is the stability of the Bitcoin price and the second is the liquidity of the order book. Both suggest, says the analyst, “an intensification of volatility is almost certain.”
Between March 18th and April 9th, 2023, Bitcoin price was stuck in a narrow range between $26,500 and $29,000. The three-week sideways trend has led to a sharp decrease in volatility or an increase in the stability of the Bitcoin price.
This is evidenced by the chart below, which the chain analyst interprets as a “prelude to a big move.” We can see that the current peak of the pink graph is second only to the peak of late 2022, which resulted in an increase of about 50%. If the scenario repeats itself, a similar rally from $27,000 will lead to a peak near $40,500.
Interestingly, this target corresponds to a recent chart from Willy Woo, in which he outlines the liquidity order book for BTC traders. There appears to be a “liquidity gap” of $30,000 to $40,000. Rapidly increasing volatility could fill this gap and Bitcoin’s rapid move towards the upper range.
The first step in this direction was already taken when the increase in Bitcoin volatility correlated with the recovery of the $30,000 level. If the trend continues, then the BTC price prediction for April in the $40,000 region is realistic.
For BeInCrypto’s previous Bitcoin (BTC) analysis, click here.
In line with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate and unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult with a professional before making any financial decisions.