Popular on-chain analyst Willy Woo says that Bitcoin (BTC) may have more room to run after crossing the $30,000 level.
Woo tells his one million Twitter followers that he’s keeping a close watch on Bitcoin’s fundamental strength indicator, which tracks 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 becomes overbought.
“If this move completes, here’s a chart to give an idea of how much room we have to move before it’s fundamentally overheated.
By fundamentals, I mean what’s happening across the BTC network… miners, cost basis of latest investors, experienced hands selling, technicals, etc.”
According to Woo, Bitcoin could cross the $40,000 level in an extension of its current rally.
“i.e. ~$40,000 BTC.”
The analyst says that Bitcoin’s latest surge was likely driven by veteran traders accumulating BTC when the king crypto’s price dipped down to about $25,000 last week.
“This move was dominated by pros accumulating against a price decline.
Chart shows futures demand, usually the instrument of pros.
They aren’t lightening their bags just yet, this can change fast.
Spot demand (longer term) was insignificant.”
Woo also believes that veteran traders are betting big on Bitcoin as they believe that the US dollar index (DXY) is on the verge of a downtrend.
“My best picture is that pros are trading on longer-term weakness in DXY technical charts. BTC is a great vehicle to trade as a proxy due to liquidity and larger moves.”
Woo says that in simple terms, the Bitcoin market is experiencing a short squeeze.
“People wanting a simpler breakdown of what this chart means.
The red line represents building demand on calendar futures markets, quantified by basis (the cost of maintaining a long position).
Ultimately it’s a short squeeze from this market…”
A short squeeze happens when traders borrow an asset at a certain price in hopes of selling it for lower to pocket the difference, but they are forced to buy back the assets they borrowed as momentum moves against them, which triggers further rallies.
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
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Source: https://dailyhodl.com/2023/06/24/on-chain-analyst-willy-woo-maps-out-how-high-bitcoin-can-surge-before-it-gets-overheated/