On-chain analyst Willie Woo gives a detailed explanation of the recent Bitcoin market situation and the impact of macroeconomic factors on cryptocurrencies.
He noted that the liquidity crisis is approaching and sales pressure from whales is growing.
According to Wu, the structural basis of Bitcoin is weakened in the current bull market. He points out that liquidity that has been driving the market for the past six months has been declining while prices are rising. He describes this as a phenomenon he also observed during the 2017 cycle.
He says Bitcoin’s recent $120,000 peak is not supported by a higher inflow of investor capital, unlike previous all-time highs.
Wu said in his report that the whales sold 115,000 to 120,000 bitcoin in the last month or two months, indicating that even long-term investors are trying to make a profit.
Bitcoin is considered a “harbinger of a liquidity crisis” because it is the most sensitive assets to global liquidity. Wu believes the Fed’s four-year liquidity cycle could be affected by the election cycle.
He expects a macroeconomic slump over the coming period and expects Bitcoin to be affected by this situation due to its high sensitivity to liquidity.
He argues that the price could fall below $40,000, but timing is more reliable than top timing.
Analysts argued that the Altcoin market is not performing as well as it had previously. He suggested that this could be because investors are being offered alternative investment tools, such as companies and businesses that have added Bitcoin to their balance sheets. Wu suggests that whales may be investing in these companies by selling bitcoin. He believes that the entry of large investors like BlackRock into this space is a positive development for the asset class.
Tether’s growth has made him a key buyer for the short-term US Treasury. According to analysts, this creates a situation in which the US government relies on Bitcoin growth to find debt buyers. For people in countries with stable currency, stablecoins are also considered an important tool for economic freedom.
Woo does not offer a specific price target for Bitcoin, but it expects it could reach the market capitalization of the global bond market or global GDP in the future, rising to the $10 trillion dollar range. However, he points out that the journey will be a volatile journey that could take over a decade.
*This is not investment advice.