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Bitcoin Price Remains Stagnant

October 27, 2018 at 17:19 by Arathur Stephen

well-known cryptocurrency analyst, Willy Woo has revealed recently that he believes that now is a perfect time to buy the flagship cryptocurrency, Bitcoin, as its price is still undergoing a bearish trend and “sitting comfortably under the 200-day moving average.

Willy Woo’s Bitcoin Price Outlook

In a series of tweets,  Woo compared the cryptocurrency’s market capitalization against the daily US dollar volume going through the blockchain network. A proportion between the two data points led to a Bitcoin Network-to-Value (Bitcoin NV) Ratio and is similar to the P/E Ratio used in equity markets. As per the analyst, when Bitcoin’s capitalization and volume value separate, the market goes bearish.

At the moment, their separation is significantly wide, taking into account their “historically tight correlation.”

Woo also acknowledged that the introduction of the Liquid Network, which is the “world’s first production Bitcoin sidechain,” could be impacting the outcome as some transaction of the virtual coin may not be transmitted through the crypto’s blockchain, thus, altering the results.

The veteran Bitcoin analyst also gave a historical correlation between Bitcoin NV parameters. He said that when it comes to payments per second going through the Bitcoin’s blockchain, we are “roughly at the same levels of 2016,” hence, the value transmitted for 6 months has been flat. In comparison, Woo added that it stayed flat for 1.5 years after the crash in 2014. According to the analyst, “on-chain volume needs to climb in order to turn around the bear market.”

Despite the bear market, those who aren’t trying to time the market could now enter the crypto space, as BTC’s price is below its 200-day moving average. Fundstrat Global Advisors’ Tom Lee has in the past argued that if BTC moves past its 200-day moving average, it may keep on rising.

For the time being, the price of the number one digital currency has historically risen in the six months after it moved past its 200-day moving average 80%, while it has dropped 50% of the times it started trading below the indicator. Nevertheless, despite the bearish trend, Lee has maintained a $25,000 by year-end price forecast.

Looking at the bigger picture of BTC as money has shown, according to Woo, that the digital currency could “jump to cross $3T of USD M1 money supply” within the next eight years, as it soared high from $100,000 to $100 billion in a similar period.

Bitcoin’s volatility has significantly been declining. Willy Woo found that back in 2016, the BTCUSD pair was marking a volatility that is similar to the forex pair, the NZDUSD, although the bull run in 2017 changed all that. Nevertheless, the pair has been trading within a tight range in the past few days as its volatility has declined significantly.

Technical Forecast

Bitcoin has continued to maintain its price range that is between the $6,800 and $6,000 levels, which both seem to be a long-term resistance and support, respectively. The crypto market is apparently motionless and will continue in this manner until the BTCUSD pair breaks out of its range in either direction.

BTCUSD saw the formation of a bearish Japanese candlestick on October 11, however, it lacked the momentum to pull the pair down below the $6,000 zone. While on October 14, the price went north past the two Simple Moving Averages (SMAs) within the range, touching its upper region.

The price has been moving around the 14-day SMA, and it now appears the two SMAs are in the same zone. The Stochastic Oscillators are bent southwards above range 40. Traders are now advised to be cautious when entering positions as the market could experience a strong consolidation move. Nevertheless, entering the market along with a strong bullish trend could be an excellent option.

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