Although bitcoin (BTC) has not recovered its all-time high of $73,700 (USD), recorded in March, there are indicators that show bullish signs. “These two and a half months of consolidation, under bullish demand, have been very good for bitcoin,” says professional analyst and trader, Willy Woo. In his view, it means that the price has more room to rise before finding a new ceiling. It bases this projection on its indicator, Bitcoin Macro Oscillator (BMO), which is made up of four metrics. These metrics are the MVRV ratio (measures whether the asset is undervalued or overvalued with respect to its historical value), VWAP (assesses the link between the price and trading volume), CVDD (identifies historical price patterns) and Sharpe (indicates risk-adjusted return). Historically, bitcoin reached the peak of a bull cycle by passing the 1.8 level of the BMO indicator. Instead, as seen on the chart, it is now at 0.6 after reaching 1.2 when it hit its record price. Therefore, Woo sees it necessary for it to return to 1.2 or 1.8 before reaching the maximum in the bull market.
Bitcoin Maco Oscillator Indicator. Source: Willy Woo. Woo also notes that capital flows into bitcoin hit bottom during the consolidation and have been increasing throughout May. This can be seen in green in the following graph.
Capital flows in the Bitcoin network. Source: Willy Woo. Similarly, he clarifies that capital has also returned to the futures markets, especially with bullish positions. “Demand is increasing, although it is far from dangerously high FOMO (fear of missing out),” he says. This is something that also shows that there is still room for more flow to enter to drive the price. This increase in demand also occurs while bitcoin continues to be withdrawn from exchanges, which indicates lower supply pressure. This can be seen in the following graph.
Bitcoin supply on exchanges. Source: Willy Woo. With this panorama, the analyst observes strength in the market to take the price of bitcoin to new all-time highs. “If the price can break above $72,000, there is an immense amount of liquidation to give BTC a short and quick trip to over $75,000,” he emphasizes. Anticipate this based on the heat map shown below, which indicates in yellow the price levels where large volumes of liquidations can occur, such as USD 72,000. It should be noted that the closing of a trader's positions due to insufficient balance margin due to price fluctuations is called liquidation.
Binance liquidation heat map. Source: Willy Woo. The liquidation heat map allows you to identify areas of high liquidity, so the market could move to that area. In this way, these price levels can function as resistances before continuing to rise if demand remains strong. “In my opinion, it is only a matter of time before fundamental demand triggers high price volatility,” concludes Woo. In tune, the analyst known as Crypto Signals commented that surpassing USD 72,000 is key for the bulls to unleash a big push. “Once we get over that hurdle, sell-offs could propel a rocket ride straight to $75,000 and beyond,” he said. Although bitcoin fell so far this week from above USD 70,000 to USD 67,000 Now, he foresees a reversal. “Pressure is building and, with fundamental demand growing, a price increase appears imminent,” he said.
Less selling pressure expected for bitcoin
In the midst of this context, Julio Moreno, CEO of the on-chain analysis firm CryptoQuant, highlighted something that he sees as key. Bitcoin's recent rise to $70,000 is not like the one two and a half months ago.
“There should be much less selling pressure from traders now as unrealized profits are low at 3% compared to early March at 69%.” Julio Moreno, CEO of CryptoQuant.
In this sense, as BitcoinDynamic reported, There are few who can be motivated to sell their bitcoin to make profits, which makes the price increase possible. However, analysts such as Paul Franke maintain that bitcoin could face selling pressure in the coming months if a recession is looming that reduces liquidity. The northern hemisphere summer, which runs from June to September, has historically been a period of falling markets, so this could prove to be a headwind.