Bitcoin is on the verge of emerging from the phase of disbelief: analyst

[ad_1]

The price of Bitcoin has risen over 28% since January 1, posting an impressive rally to start the year. The price movement was driven by global financial market expectations that the US Federal Reserve will continue to slow its pace of interest rate hikes before the pivot hits later this year.

According to Bitcoin on-chain analysis pioneer Willy Woo, this has led to the market now being in the “disbelief” phase of the cycle. Woo refers to the chart below, which is generally used to describe market cycles in all financial markets, and said, “I suspect we’re in the ‘disbelief’ phase of the cycle.

Woo claims that BTC has already gone through the panic, anger, and depression phases, and is therefore at the end of the cycle and about to enter a new market cycle.

In the current phase, the sentiment of traders is dominated by the motto “This rally will fail like the others”. and “It’s a gathering of suckers.” A currently widespread opinion on crypto Twitter. Once the phase of disbelief has passed, the hope of a possible recovery emerges.

Market Psychology | Source: TwitterBitcoin On-Chain-Data suggests phase of disbelief

To support this thesis, the famous on-chain analyst cites three key on-chain metrics, the first being CVDD (Cumulative Value Days Destroyed). This, according to its inventor Woo, historically identified the bottom of the market.

It is based on the theory that the market perceives a higher floor when old coins (eg, bought at $1,000) are passed on to new investors (eg, at $10,000). In the chart, we can see that the CVDD Floor has been successfully defended since late November, as Woo stated:

CVDD Floor (circa 2019) successfully defended for 2 consecutive months, the first proper test outside of COVID where the crash came close. I hope it’s not a famous last word :). Spot momentum was strong throughout this move, there was also solid accumulation for months at 16k.

Bitcoin Price Pattern | Source: Twitter

Another indicator that Bitcoin has found its bottom is the cost basis comparison. The maximum discount that short-term buyers had over long-term buyers peaked.

“It is only in the deep parts of a bear market that short-term coins become cheaper than long-term coins,” Woo explained and shared the following chart.

BTC cost basis | Source: Twitter

Third, the analyst cites the BTC macro index, which signals a “fairly safe” time to buy. “Look at the vertical bisection strips; we are now about 1 month away from the period when the reaccumulation phase of the market starts to kick in,” says Woo.

Bitcoin Macro Index | Source: Twitter

At press time, BTC stood at $21,119, leaving the price locked below daily resistance. A break above the $21,500 level would be crucial to build confidence in the rally and dispel beliefs that the recent move could be a bullish trap.

Bitcoin Trading Below Daily Resistance, 1-Hour Chart | Source: BTCUSD on TradingView.com

Featured image from Kanchanara / Unsplash, chart from TradingView.com

[ad_2]