Analyst Willy Woo stated that the recent price surge in Bitcoin is technical rather than fundamental. Despite the temporary increase in price, potential market weakness and speculative pressure still exist.
Although Bitcoin (BTC) recently surged to the $6,200 mark, the largest cryptocurrency by market value is still struggling under bearish pressure.
After reaching a high point of over $7,300 in March, Bitcoin fell nearly 20%, with the trading price dropping below $6,100, and the latest fluctuation reaching $6,060 at the time of writing.
This decline comes amidst broader market challenges, reflecting a significant pullback from earlier gains and suggesting potential weaknesses in the market fundamentals.
Assessing Bitcoin’s recent price surge
Cryptocurrency analyst Willy Woo recently provided insights into the volatility of BTC, indicating that while the recent price adjustment alleviated some of the market’s excessive leverage, a comprehensive recovery is not imminent.
Woo stated that there is still an excess of speculation in the market, which needs to be addressed to stabilize prices.
He pointed out that the recent rise in the price of Bitcoin to $6,200 is more of a technical rebound than a fundamental recovery, indicating that there are deeper underlying issues in the Bitcoin market.
Willy Woo described the latest surge in Bitcoin prices as a technical rebound, attributing it to automatic reactions in trading algorithms rather than a genuine increase in buyer demand.
He highlighted specific patterns, such as TD9 reversals and hidden bull divergence, indicating short-term recovery but not necessarily long-term health.
Woo stated, “So far, this technical reversal is playing out.”
However, Woo emphasized that this rebound does not reflect underlying fundamental strength.
The market is merely correcting from a previous oversold state, and there has been no significant change in the actual demand and supply dynamics of Bitcoin.
To achieve a genuine bullish reversal at a fundamental level, there needs to be an increase in spot buyers purchasing coins directly from exchanges, a trend that is not yet evident.
Woo also noted, “We are still waiting for a hash rate recovery, which is a key indicator that miners have stopped selling to fund hardware upgrades.”
He concluded, “So, prepare for a very boring price action over the next few weeks. It’s not moon boy time. It’s time for speculators to get liquidated, or until they get bored and close. Then we can move forward. The best path here is to stack spot, let the degens die.”
Market data insights
Further exacerbating the pessimistic outlook are the publicly available interest rates and trading volume data for Bitcoin.
An analysis of Coinglass data by AMBCrypto showed a significant 2.16% decrease in the open interest contract volume and a 25% decrease in the open interest trading volume over the past day, indicating reduced trading activity and potentially lower speculative interest.
This decline may suggest that traders are less willing to hold Bitcoin positions, and it is expected that Bitcoin prices may further decline.
Additionally, as of the time of writing, the MVRV ratio comparing Bitcoin’s market value to its realized value is 1.98. This helps indicate whether Bitcoin is undervalued or overvalued compared to its historical price standards.
An MVRV ratio below 2 usually indicates that Bitcoin is undervalued, which could mean that there is potential for an increase in Bitcoin prices if market sentiment changes.
Reading Bitcoin’s [BTC] Price Prediction 2024-25
However, given the current market conditions and broader economic uncertainty, caution must be exercised regarding this growth potential.
Despite the bearish trends, there are still some optimistic predictions, such as AMBCrypto’s prediction of a surge in Bitcoin prices to $250,000 based on the Bitcoin Rainbow chart.