After Bitcoin failed to sustainably overcome the major resistance at $16,600 within the last five days, the price saw a renewed retreat a few hours ago.
A week ago, on November 21, the price of BTC fell to a new bear market low of $15,480, after which the price saw a spike that, however, ended abruptly, questioning the strength of the bulls.
At press time, BTC was trading at $16,195 and initially found support at $16,050. If the nearest resistance at $16,310 does not return to support, a retest of the current bear market low could be on the cards.
Bitcoin Bottom Not In Yet?
Meanwhile, well-known on-chain analyst Willy Woo told his 1 million followers that a Bitcoin bottom could be near. The analyst uses three on-chain data models to come to this conclusion.
As Woo writes, CVDD’s floor price is currently being tested. The model examines alternatives to the market price. Dotted lines mean that the model is purely technical, meaning it uses only the market price as an input. Solid lines include metrics that come from the blockchain, meaning they include fundamentals about investor, network, and user behavior.
Finally, the model created by Woo in April 2019 uses the age and value of Bitcoin moving to new investors to create a floor. Woo’s theory: “When significantly old coins (say bought at $100) pass to new investors (say at $16k), the market perceives a higher floor.”
Currently, the model with a proven track record shows a second retest.
The maximum pain pattern also signals that Bitcoin’s bottom is approaching. Historically, the price of Bitcoin reaches its bottom of a macro cycle when 58%-61% of the coins are in the loss zone. Whenever the price fell into the green zone, it marked a floor.
“The upper limit of the shaded area is at 13k and increasing rapidly,” Woo said. Thus, another price drop could be possible, although the analyst also emphasized that not all the lows were reached, with “those that were not close.”
Third, Woo looked at the MVRV ratio. This represents the ratio between the market cap and realized cap. Its purpose is to show when the exchange trading price is below “fair value” and to identify the highs and lows of the market. Analyzing the MVRV ratio, Woo states:
MVRV ratio is deep within the value zone. Under this signal we were already in a bottom (1) until the latest FTX white swan bust brought us back into a buy zone (2).
Overall, Woo sees the possibility that the bottom could mean a little more pain for Bitcoin investors. He also points out that the market is in an “unprecedented deleveraging scenario”, testing all models.
Bitcoin Miner Surrender Causing Maximum Pain?
As Glassnode’s senior on-chain analyst Checkmate noted via Twitter, Bitcoin miners could be in for more pain as they have faced serious problems in recent months.
The hash price fell to an all-time low. The mining industry is fast becoming another problem area in the market and thus, the risk of “miner capitulation in round 2” is also increasing.