After failing to sustainably overcome the key $16,600 resistance for the past five days, Bitcoin saw another pullback a few hours ago.
A week ago, on November 21, BTC price fell to a new bear market low of $15,480, after which the price saw a spike, but ended abruptly, casting doubt on the strength of the bulls.
At the time of writing, BTC was trading at USD 16,195 and initially found support near USD 16,050. As the nearest resistance at $16,310 does not return to support, a retest of the current bear market low could be in the offing.
Bitcoin bottom still not in?
Meanwhile, well-known on-chain analyst Willy Woo has told his 1 million followers that a Bitcoin bottom could be near. The analyst uses three on-chain data models to reach this conclusion.
As Woo writes, the CVDD 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 input. Solid lines contain metrics that come from the blockchain, meaning they cover the basics of investors, networks, and user behavior.
Ultimately, 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 (e.g. bought for $100) are passed on to new investors (e.g. $16,000), the market sees a higher floor.”
Currently, the model with a proven track record is showing a second retest.
The max pain model also indicates that the Bitcoin bottom is approaching. Historically, the Bitcoin price reaches the bottom of a macro cycle when 58%-61% of coins are in the loss zone. Every time the price has fallen into the green zone, it has marked a bottom.
“The upper limit of the shaded area is 13k and rising rapidly,” Woo said. So another price drop would be possible, although the analyst also stressed that not all lows had been reached, with “those that hadn’t been close.”
Third, Woo looked at the MVRV ratio. This represents the ratio between the market capitalization and the realized cap. The purpose is to show when the exchange traded price is below “fair value” and to identify the highs and lows of the market. Woo analyzes the MVRV ratio and states:
The MVRV ratio is deep in the value zone. Below this signal, we were already at the low point (1) until the last FTX White Swan debacle put us back in 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”, with all models being tested.
Bitcoin Miner Capitulation Causes Maximum Pain?
As Glassnode’s senior on-chain analyst Checkmate pointed out via Twitter, Bitcoin miners could be a cause for more pain as they’ve run into serious trouble in recent months.
The price of hashish has fallen to an all-time low. The mining industry is quickly becoming another problem area in the market and so is the risk of “round 2 capitulation of miners”.