Popular on-chain analyst, Willy Woo, warns that the Bitcoin bottom is not yet in.
While many crypto investors believed that the bottom was reached in June when prices dipped below $20,000, Woo predicted another price drop when max pain was breached on September 9. But this is not all there is according to the analyst who told his Twitter followers after having taken some time off from the social media platform:
“Have we bottomed?
In terms of max pain, the market has not felt the same pain as prior bottoms. We can see this in the blue line (supply in profit by glassnode).
We have only reached 52% of coins being underwater so far.
Prior bottoms were 61%, 64%, 57%.”
Woo makes use of on-chain data to determine whether the crypto market is oversold, a term that refers to coins that are unprofitable because of high fees and transaction costs. One data point that Woo considers is the percentage of coins underwater. When this number reaches its max — or highest point — there’s a possibility of the crypto market tanking once more.
Currently, only 52% of coins are underwater, data used by Woo shows. Compared to previous bottoms of previous cycles, this is at least 5% lower than it should be. This means that the current market price shouldn’t be considered a reversal point. However, it’s difficult to determine the most painful price for most traders and investors because their positions are distributed unevenly across different support and resistance levels.
A move below $19,000 would likely cause many coins to become unprofitable. This would cause a noticeable increase in the percentage of unprofitable coins.
Since releasing the latest consumer price inflation data this week, Bitcoin has taken another hit and it appears that the reversal of Bitcoin’s price may have been postponed. However, its prices have stayed in the lower range. This implies that the current correction is probably close to its final stages. Once the United States’ monetary policy eases, it’s likely that we’ll see a return in risk demand and a renewed appetite in cryptocurrencies which in general have become a main tools to cover this demand.
At time of writing, Bitcoin’s price was $20,123 per coin, according to CoinMarketCap data.
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Source: Igaming
