Investors are hoarding and BTC inventories on exchanges are down.
A supply shock similar to that of November 2020 is forming, says Willy Woo.
Following his last market bulletin last Monday, Aug. 23, in which he warned of “a short-term bearish outlook” in the bitcoin market, analyst Willy Woo notes this Friday that long-term investors are returning to an accumulation phase.
“A new supply shock is forming that is expected to drive the price higher in the fourth quarter of this year, similar to what happened in the fourth quarter of 2020 and the first quarter of 2021,” the analyst argues in his analysis
A situation is shaping up that has not been seen so far in the bitcoin market, Woo notes, as there are early signs that the bitcoin cycle pattern of the past four years may break down. The analyst had already made reference to this issue in a tweet on August 18. Woo said in that opportunity that, if the bullish cycle extended to 2022, bitcoin could break free from the four-year cycles that have so far been imposed by the halvings.
The chart below shows that both the supply shock, or unavailability of supply on the exchanges
, and the demand shock due to investor demand, show a rebound in recent days. Supply shock associated with exchanges and investor demand for bitcoin. Source: charts.woobull.com.
This implies that investors are hoarding and exchange inventories have shrunk, both indicators of upward pressure on bitcoin’s price, Woo notes. “The reality is that there is a supply shock and a flat, not bearish, price action outlook,” the analyst said.
Change in bitcoin’s accumulation trend
Regarding last Monday
s newsletter, commented by CryptoNews, there was a change in the strategy of long-term investors. From a selling phase, there was a return to BTC accumulation, Woo argues.
The following bitcoin trading heatmap provides an update to the one shown last Monday
. From a selling situation shown in the previous chart, here the most recent activity is buying (green circle). Bitcoin buying and selling map of long-term investors. Source: Source: charts.wobull.com.
This map shows two overlapping impacts on the visualization, Woo claims: BTC flows from long-term investors, and net flows to and from exchanges. In both cases, red is bearish and green is bullish, he says. It can be inferred that, if investors are buying, there would be upward pressure on prices, as bitcoin would appear undervalued.
At the time of writing, bitcoin is trading at USD 48,302, which represents an appreciation of 3.07% in the last 24 hours, according to the CryptoNews price index.