On-Chain Bitcoin Analyst Explains Why $BTC Price ‘Rocketed Past’ $23K

On Thursday (January 14), prominent on-chain crypto analyst Willy Woo explained the real reason for the current Bitcoin rally that took the BTC price to almost $42,000 last Friday (January 8).

At the beginning of December 2020, with Bitcoin trading around the $18,900 level, Woo said that his previous Bitcoin price target — $200,000 per BTC by the end of 2021 — seemed “conservative” and that it was quite possible for the Bitcoin price to reach $300,000 by that time.

Woo said that he is more bullish on Bitcoin in 2021 than ever before for two reasons:

  • The current “re-accumulation phase coincides with spot market inventory depletion roughly 2x longer and deeper than the last cycle.”
  • In the current cycle, USD gain in market cap per dollar invested “has significantly increased over past cycles.”

Well, yesterday, Woo took to Twitter again to point out the realization that there are roughly 47 million millionaires in the world and only around 4.1 million BTC is purchasable has resulted in FOMO in high net worth individuals, which he believes is the real reason that Bitcoin has doubled in price since breaking its all-time high last month.

Woo talked more on this subject during his interview with crypto journalist and podcast host/producer Laura Shin for episode #207 of the highly recommended “Unchained” podcast — which was released on January 12.

Shin started the interview by asking Woo why Bitcoin had more than doubled in the last month.

Woo replied:

I think it’s a really a validation of Bitcoin by the institutions. You know, we’ve had all manner of hedge fund managers say that Bitcoin is a valid investment at this time…

There’s a lot of interest now not from high net worth individuals, and I’m hearing through the grapevine that there are so many of these people that have looked it… and now they need allocation…

Everything I’m seeing on-chain as we sort of decompose who is buying what quantities, you know, what’s the nature of these buyers, we’re seeing that there is a planet worth pulling large purchases and they’re long-term buyers.

I work a lot with Glassnode, which decomposes a lot of this on-chain data, and one of their latest metrics is this measurement of where the coins are moving to…

Are they moving towards participants that are long-term holders or more liquid participants who tend to hold it, trade it, you know, buy and sell with the swings, and what we’re seeing now is this unprecedented swing to these holders that are holding these bitcoins and they don’t tend to sell so regularly…

And so as these coins are being bought and locked up by these holders… you’ve got like all of these investors that are wanting to buy one million dollar bullets of investment into Bitcoin and not competing…as the price is raising, now chasing it, and so it’s not letting the price settle… so, the price sort of runs, and it gets to a point where it’s a little bit too too frothy, it sort of settles for a few days, and then it launches again.

Woo also talked about his “Top Cap” price prediction model for Bitcoin:

Essentially the Top Cap model is a model that uses the theory of mean reversion. And in simple language, what that means is that it’s a theory that the price of an asset always reverts to the long-term average of the entire history of the data set…

We don’t know how it [Bitcoin] will trade through the next 12 months. But you can gauge it from historical sort of movements of Bitcoin price and make a guess of where the arc is going…

If we don’t arc upwards and we assume the top of the bull market is around December this year… we’re going to go above $100,000, even if it doesn’t arc upwards. If we arc upwards, we’re up to $200,000 to $300,000… conservatively, I mean… Given the size of this rally, it’s going to push it higher.


The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.

Featured Image by “petre_barlea” via Pixabay.com

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