Recent analysis by veteran digital asset analyst, Willy Woo, indicate that the price of Bitcoin (BTC) will test levels below $6,000 before any signs of recovery can be seen in the markets. Mr. Woo, via twitter, indicated that his analysis did not see BTC holding at $7,000 and would plunge further to $5,500 – $5,700 levels before any signs of recovery.
He had this to say via twitter:
I think we are gonna go to $5500-5700 next, I can’t see $7000 holding. Most likely we’ll balance a bit, then we’ll slide through. Long timeframes here, looking into June for rough timing of this to play out at a best guess
He outlined 4 reasons in the follow up to the tweet, for the lack of stability in Bitcoin
- The NVT signal is still too high for BTC. The market needs more blockchain transactional activity to justify the current price or the price to drop to reconcile the difference. The said transactional activity is highly unlikely in a bear market. Therefore, there will be further decline in BTC
- The volatility is still too high
- The standard NVT is high and more time will be needed to bring it down
- A Volume profile cliff below $6,800
What exactly is an NVT signal/ratio?
Standard NVT Ratio is simply the Network Valuation divided by the Transaction Value flowing through the blockchain and then smoothed using a moving average. NVT Signal then applies the moving average to only the transaction value. The signal is the work of Willy Woo and Dimitry Kalichki.
Further insights by Willy Woo about the current trend.
Willy Woo would further state that he does not see BTC falling further down the $5,000s levels. He was also quick to point out that given the historical background of the crypto markets, there is more data to work with than in 2014. He stressed that the price of BTC follows an adoption curve where we see a climb, then consolidation, then another climb and consolidation.
Mr. Woo had this to say to summarize his observations:
So, in summary, my best guess… slowish bleed down to $6800… then a steeper slide to $5700, then a leveling out of the drop… then a flat zone. This is an educated guess based on volume profile and fundamental data framing the rate of movement.
In conclusion, the situation in the crypto markets will get worse before it gets better with the next rally possibly in the third quarter of 2018.