Wednesday, August 10

Bitcoin demand weakened after hitting all-time high

Key facts:
  • On-chain data points to strong support at $ 55,000, analysis highlights.

  • Short-term Holders have had less involvement in the recent BTC rally.

The price of bitcoin remains overvalued and although demand has increased in the last two weeks, it is not enough to justify prices around $ 65,000, says analyst Willy Woo. BTC’s price is consolidating below last week’s highs, with strong support at $ 55,000, says the analyst.

In the long term, the supply shock is strengthening at higher levels of accumulation by long-term holders, Woo reiterates. He warns, however, that it remains to be seen how long this parameter will remain at maximum levels, says the analyst in your most recent newsletter about the bitcoin market.

“Typically, this metric begins to decline once a strong rally, and long-term holders start selling. From this point of view, the bullish structure is still in an early stage. This promises a bull market well into 2022, “says the analysis.

As can be seen in the following graphic, the supply shock of long-term holders is in a zone of maximum values. When these highs occur, as can be seen in the graph, there is usually a low in the price of bitcoin and subsequently a rally bullish.

The behavior of demand from long-term holders suggests a bullish rally. Source:

Short-term investors: less demand for BTC

Short-term holders have had less participation in the rally that pushed bitcoin to its recent all-time high, the analysis claims. The supply shock for these holders is not growing, Woo notes.

The analysis highlights a slightly bearish trend for short-term holders. Source:

This metric, which is associated with less availability of BTC in the market, has grown moderately in recent weeks. But in recent days, with regard to short-term holders, a slight drop is noted and the author highlights it on the chart.

Using the Supply Shock Oscillator metric, price entry into an oversold region is evidenced, as shown in the following graph.

The pink circle indicates that the price of BTC is above what corresponds to your demand. Source:

Woo notes that the price is returning from high oversold levels to values ​​more consistent with investor demand.

Meanwhile, as the price cools, the flows from the spot exchanges (in the graph below) show us that the last 2 weeks has seen new demand from investors with the departure of BTC from exchanges and inflows. from USDC. This is a classic buying pattern.

Willy Woo, on-chain data analyst.

Outgoing BTC flows from exchanges coincide with USDC incoming flows. Source:

In the last two weeks, there is new demand from investors, as BTC inventories from exchanges decrease, Woo clarifies. However, it is a moderate demand compared to the one observed before the historical maximum of October 20.

In a tweet on October 27, the analyst draws attention to an appreciation of more than 100% in the price of BTC in three months, from the low of USD 29,000, on July 20. Still, consider that “we are not overheated, just lukewarm.”

The analysis emphasizes that, with insufficient demand, price action could be unstable with a downward trend. It clarifies, however, that the fundamentals of the chain indicate support at $ 55,000. In the long term, the trend continues to be upward due to the accumulation maintained by long-term holders.