Bitcoin’s most ‚organic‘ rise for years: trader explains why a top blow-off is unlikely

On-chain analyst Willy Woo presents three reasons why a top blow-off is unlikely in the short term for Bitcoin

Despite the steep rise in Bitcoin (BTC) in November, the price is consolidating above $15,000: on-chain analyst Willy Woo says a top blow-off is unlikely for three main reasons.

The three factors are the increasing outflow of funds from exchanges, the increase in the number of „HODLer,“ and data that investors have already cashed in profits.

Bitcoin moves from exchanges to individual wallets

According to the data provided by Glassnode, at the end of October a large quantity of Bitcoins abandoned the centralised exchanges.

Woo claims that this parameter is positive as it shows that investors are transferring funds from trading platforms to personal wallets. Therefore, it seems that users are more inclined to retain their BTCs by following a long-term investment strategy.

In this period, the analyst points out, we have seen the highest number of Bitcoins moved from exchanges in the last five years:

„An incredible amount of coins have been withdrawn and transferred on individual wallets. Widening the view to put it into perspective, this is the largest daily movement in this chart over the last 5 years“.

The number of „HODLer“ is increasing

In the cryptocurrency market, analysts refer to long-standing Bitcoin owners as „HODLer. These investors tend to hold BTC for extended periods of time, often longer than a year.

Prior to the sharp rise that led Bitcoin to new multi-year highs, Woo reported a significant increase in the number of HODLers, peaking in October 2017, just months before BTC’s all-time high in December. Woo commented:

„Before this rise, the influx of new HODLer seen on the blockchain was skyrocketing. I repeat, skyrocketing, I’m not joking. An adoption of this magnitude was last seen in October 2017; a month before BTC entered its chaotic phase“.

The high number of HODLer is an important parameter because it shows genuine retail demand underlying a bullish trend. An increase in BTC driven primarily by the futures market could be vulnerable to a strong pullback.

The risk of a severe correction is lower

Bitcoin’s Spent Output Profit Ratio (SOPR) indicator shows whether investors are cashing in their unrealized profits.

According to Glassnode’s data, a rather high number of investors have cashed in their profits over the last week. This suggests that the threat of a strong correction due to the sale of realized gains is minor, as investors have already started to cash in their profits and the coins sold have been absorbed by buyers.

Based on the three factors described, Woo pointed out that he does not expect a top blow-off. This term refers to a technical formation in which the price of an asset collapses rapidly after having touched a strong level of resistance. Woo explained:

„General conclusion: I do not foresee a top blow-off. I am waiting for the consolidation to be completed, then a further bullish movement“.

In the short term, the risk for Bitcoin’s current growth remains the overcrowded derivatives market. Therefore, analysts expect a consolidation phase but not a serious correction, at least for now.

Still waiting with the Bitcoin purchase? Economist warns: BTC „is highly unstable

Wait with Bitcoin purchase? Economy- BTC „is highly unstable

Bitcoin has experienced a strong upswing since the lows in March, rising from $3,500 to as much as $16,000.
If you go back even further, the performance of Bitcoin is even more impressive.
Still, the crypto-currency has its critics.
Professor Steve Hanke of John Hopkins University, also of the Cato Institute, says Bitcoin remains a „highly unstable“ and speculative asset.
Hanke has been a Bitcoin skeptic for some time now, having made similar comments in the past.

BTC remains „highly unstable

Bitcoin has experienced a strong increase since the lows in March. The crypto currency has soared from $3,500 to $15,500 during this period – which means that a rally of 350% has taken place.

If you go back even further, Bitcoin’s performance is even more impressive, outperforming virtually every other existing asset class.

Still, the crypto-currency has its critics. Professor Steve Hanke of John Hopkins University, part of the Cato Institute, says Bitcoin remains a „highly unstable“ and speculative asset:

„“Bitcoin has recently outperformed stocks, gold and other assets. It is currently traded near three-year highs. Just further proof that BTC is nothing more than a highly unstable and speculative asset – NO CURRENCY“.

Hanke has long been a Bitcoin skeptic and had made similar comments in the past. Some in this room have tried to refute his opinion.

Alex Gladstein, CSO at the Human Rights Foundation and a prominent supporter of Bitcoin, once responded to Hanke:

„Did you know that if I send you Bitcoin, nobody can stop us? That no government, no company and no oligarchy can change its rules? That nobody can change the output of Bitcoin? That when used correctly it is incredibly difficult to confiscate addresses or link addresses to people? Why deny it when you can learn?

Bitcoin has notable supporters

Hanke is indeed a critic of Bitcoin – like other economists and investors in a prominent role. However the crypto currency has also considerable proponents.

Thus the billion-strong investor Paul Tudor Jones commented recently that the crypto currency is today in a similar position as Apple and Google at the beginning:

„Bitcoin has this enormous contingent of really, really smart and cultured people who believe in it. It’s like an investment in Steve Jobs and Apple or an early investment in Google“.

Even large companies support Bitcoin. Microsoft has used the crypto currency for an experiment in digital ID, and Fidelity Investments, the trillion dollar asset manager, has also made remarkable investments in the space.