On Aug. 22, technical analyst and creator of the stock-to-flow model Willy Woo posted a chart of Bitcoin inventory on exchanges.
He noted that things have been bearish until the start of August due to an influx of around 100,000 BTC from the German and US governments selling and Mt. Gox distributions.
He added that “speculation has been rife creating more paper BTC.” Paper Bitcoin refers to derivatives such as futures and options that don’t involve direct ownership of the asset.
Healthy Paper Bitcoin Flushout Needed
However, the market crash in early August flushed out a lot of that paper Bitcoin and leverage which has been keeping markets depressed, he said before adding:
“That’s a healthy reset of open value (paper bets). It’s really hard for BTC to climb when there’s overheated speculation in the market.”
I've been on RnR for a while, but…
Here's the chart I like best to set the scene.
Less inventory = bullish
Until the start of Aug, we've been in a bearish stance with an influx of 100k coins (Germany, MtGox, DOJ) while speculation has been rife creating more paper BTC. pic.twitter.com/Yq7yhMpRZ8
— Willy Woo (@woonomic) August 21, 2024
Woo said that “BTC price action needs to get really boring” before adding, “I feel like we are 66% the way there,” in that much of the speculation has left, and more spot BTC to be absorbed.
In terms of supply and demand, there has been a recovery from short-term bearish to “delicately neutral,” he said before adding:
“But over the longer term, the good news is we aren’t in a bear market. Just a very long consolidation.”
Meanwhile, fellow analyst Peter Brandt observed that the current bull market cycle will soon become the longest-time post-halving in history for a new all-time high. He added that this could indicate that a new all-time high this cycle may not necessarily be on the cards.
However, ITC founder Benjamin Cowed pointed out that Bitcoin is pretty much where it should be in terms of progression through the market cycle compared to previous ones.
Despite everything, #BTC is right around where it always is at this point in the market cycle pic.twitter.com/zO52x9tAtX
— Benjamin Cowen (@intocryptoverse) August 21, 2024
BTC Price Outlook
Bitcoin prices hit a weekly high of $61,800 during late trading on Aug. 21. However, the asset has pulled back to just over $60,500 during the Thursday morning Asian trading session.
Despite all the selling from states and defunct exchanges, BTC has remained range-bound since recovering from its big dump earlier this month.
Analyst ‘Rekt Capital’ said that BTC would need to break resistance at $61,420 for this week to count as a new uptrend.
#BTC
Once Bitcoin has solidified itself at the Channel Bottom…
The uptrend across the Channel to the very top of it would likely take 2-3 weeks
Convincingly break ~$61420 soon and this week will technically count as week 1 in that new uptrend$BTC #Crypto #Bitcoin https://t.co/0Oj3OcJBf4 pic.twitter.com/5wnFbgN5cQ
— Rekt Capital (@rektcapital) August 21, 2024
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