Bitcoin [BTC] price has arrived at a major resistance level around $12000. Leading on-chain analyst, Willy Woo, points out that more than 93.5% of the Bitcoin accounts are below break-even price of the purchase cost. Could this be the end due to profit-booking or as Woo suggests, the beginning of a mega-bull phase?
How High Can Bitcoin [BTC] Prices Go?
There are numerous predictions around the future peaks in Bitcoin [BTC] price. Most recently, Bobby Lee re-affirmed his $500,000 dollar prediction. However, according to Woo, the sky is the limit
He points out from the previous views of Vijay Boyapati, that as the weak-hands begin to drive out break-even prices the narrative for the next phase is building. Moreover, coupled with the reduction in sell-side impulse due to the halving it is clearly in a bullish cycle. Woo notes,
The bull market really started April 2019. What’s started recently is the early main bull phase, it’s Q4 2016 all over again, but different dynamics and themes at play.
The gains during the final phase of the bull run in 2017 were beyond anyone’s imagination. The euphoria in DeFi along with the correlation in gold acting as positive reinforcements will look to replicate those gains.
The Profit Booking Phase
However, the world is going through one of the worst recessions of history. At the same time, asset prices including gold, silver and stocks are sky-rocketing. The mistrust in the economy is causing sentiments of weak hands in general. Saikat Chatterjee, senior correspondent at Thoman Reuters notes in a social media post,Advertisement
Average holding periods for investors, already on a downturn, have fallen more in recent months as the unprecedented stimulus has driven a wedge between market prices and economic reality.
The Federal Reserve balance sheet has risen at the same rate as the expansion of prices in the S&P 500 index. In such a scenario the tendency to book profits increases considerably. The drop in the price of gold and Bitcoin in all likelihood extends these sentiments. The rise bitcoin in the last four weeks is 27.32%, in addition to the initial surge from $3800 above $9000. Philip Gradwell, the Chief Economist at Chainalysis finds that,
price is facing pressure as holders take profits, sending more bitcoin at a 25%+ USD gain than since the 2017 bull market
He finds a similar trend in Ethereum as well. Mati Greenspan, leading financial analyst and founder of Quantum Economics, also pointed out that the fear and greed index is also peaking at the moment.
Ideally, if the markets are able to observe the selling-pressure and hurdle past the immediate resistances, the bull phase as Woo suggests above should continue.