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In his recent analysis, popular on-chain analyst Willy Woo predicts that a stock market crash coupled with a rising U.S. dollar could increase the possibility of Bitcoin’s bearish outlook in the near future.
A Stock Market Crash Could Decrease Bitcoin’s Price
In the latest tweetstorm, popular analyst Willy Woo explains what could stall Bitcoin’s price expansion. Among them includes a stock market correction, along with a rising price of the USD, saying:
“My only concern for downside risk is if we get a major correction in equities which will pull BTC price downwards no matter what the on-chain fundamentals may suggest. Noticing USD strength on the DXY, which suggest some investors moving to safety in the USD.”
However, the leading cryptocurrency has not yet entered the bearish territory, according to him:
“The first thing to look at is to answer, ‘Are we in a bear market?’ Welp, bear markets start when no new buyers enter to support price, and that ain’t happening. We have a healthy growth of new users joining the network.”
#marketupdate, IMO from on-chain is sideways then bullish in maybe a week or so.
Some downside risk if stonks tank, a lot of rallying in the DXY (USD strength) which is typical of money moving to safety.
— Willy Woo (@woonomic) June 18, 2021
BTC Moving from Weak Hands To Strong Hands
The analyst further notes that Bitcoin has been moving from weak to strong hands during the recent Bitcoin sell-off, based on on-chain signals.
Reportedly, short-term-holders who entered the crypto market in the last 1-6 months have been facing losses but whales and long-term holders have been accumulating at every stage.
“We had a huge sell-off by previously strong hands (looks like noob buyers that bought 1 million – 6 million ago). All of those coins that dumped onto the market need time to be re-accumulated. This is happening now. Price action looks like an accumulation bottom because of this.”
At the same time, looking at the network-to-value transaction, calculated by dividing the market cap of BTC by on-chain transactional volume, Woo says Bitcoin is massively undervalued:
“Using NVT to value the network, we are statistically oversold from fundamentals at historic levels. Note we were devoid of a mania top before the sell-off. This sell-off happened when the price was well within the fair value. So it doesn’t match the start of bear season.”
NVT Signal is in a no-brainer buy zone. (short term signal) pic.twitter.com/v8USF7yE9l
— Willy Woo (@woonomic) June 18, 2021