On-Chain analyst Willy Woo charts how high Bitcoin can go before it overheats
Popular chain analyst Willy Woo says Bitcoin (BTC) may have more room to run after crossing the $30,000 level.
Wow says his one million Twitter followers that he closely watches Bitcoin’s fundamental strength indicator, which traces 17 fundamental and technical indicators.
According to Woo, Bitcoin could shoot up more than 30% from its current value of $30,555 before the top digital asset is overbought.
“If this move is completed, here is a chart to give an idea of how much space we have to move before it becomes fundamentally overheated.
By fundamentals, I mean what happens across the BTC network…miners, cost basis for the newest investors, experienced hands selling, technical, etc.
According to Woo, Bitcoin could cross The $40,000 level in an extension of the current rally.
“ie ~$40,000 BTC.”
The analyst says that Bitcoin’s recent surge was likely fueled by veteran traders who accumulated BTC as the price of the royal crypt fell to around $25,000 last week.
“This move was dominated by the pros accumulating against a price decline.
The chart shows demand for futures, usually the pro’s instrument.
They are not lightening their bags yet, this could change quickly.
Spot demand (long-term) was negligible.”
Woo too mean that veteran traders are betting big on Bitcoin as they believe the US dollar index (DXY) is on the verge of a downtrend.
“My best picture is that the pros are trading on long-term weakness in DXY technical charts. BTC is a great way to trade as a proxy due to liquidity and bigger moves.”
Wow says that simply put, the Bitcoin market is experiencing a brief squeeze.
“People want an easier view of what this chart means.
The red line represents building demand in calendar futures markets, quantified by basis (the cost of maintaining a long position).
Ultimately, it is a short squeeze from this market…”
A short squeeze occurs when traders borrow an asset at a certain price in hopes of selling it lower to pocket the difference, but are forced to buy back the assets they borrowed as momentum moves against them, triggering further rally.
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