#forecast 016 : Intermission

Dear subscribers,

Welcome to The Bitcoin Forecast #016.

My  last letter came at a time when the market was in a bearish stance while capital flows into the network were accelerating. The giveaway title of  “buying the dip” called for a bottom reversal and a retest of all-time-highs within 2-3 weeks. Now 2.5 weeks later, Bitcoin has completed its retest of the $61k ceiling and is currently hovering slightly below.

Top level summary for 11th April 2021 (current price $58.9k):

Short term: Long term buyers continue to accumulate, buying each dip, while price consolidates. The most probable outcome is continued sideways price action, followed by a strong bullish break of the $61k ceiling. This could be at anytime within the next 2 weeks.Short term speculators continue to FOMO into long positions at every price high presenting lucrative opportunities for the market to counter trade them, it’s likely that we need a window where long positions are not in demand before price can break the all-time-high ceiling.

Long term: Miners have surpassed their prior 2017 highs in revenue. This marks a kind of halfway point in the Bitcoin bull run. It’s “intermission” time. Bull market top continues to point to a target above $300k.

All the best, till next time.

-Willy Woo

Analysis Breakdown

Price consolidates while accumulation from long term investors continue

The last 3 weeks has seen consistent bullish flows of coins being bought and moved off spot exchanges.  46707F

Note: This chart corrects for a false-positive large withdrawal from Bitstamp on 6th April, this was determined to be an internal transfer.

These coins are moving to long term holders with little history of selling as marked by red bars in the chart below.

Ultimately we’re in a very large sideways band of consolidation while coins continue to be accumulated with every dip being snapped up by long term investors. If this pattern continues, it’s only a matter of time before the resistance band breaks and price explores new highs.

Funding rates continue to punish early speculator FOMO

While price action is in its current sideways consolidation, I’ll mention that each approach we’ve had towards all-time-highs has brought with it retail speculators FOMO-ing into long positions. Each time this has caused a price rejection, as it’s very lucrative to counter trade the long positions. We can see this in the chart below which tracks the cost of funding a long position.

Glassnode:  live chart

It’s likely in my opinion that rates will normalise down to lower levels before we ultimately see a break of the $61k all-time-high. That’s assuming Elon Musk doesn’t tweet something bullish on Bitcoin, or any other similar event.

Price floor update

Here’s an update on the estimated price floor. We’re presently at $48.7k for the floor price. The floor has been consistently climbing as new capital enters the network, while price is trapped under the all-time-high ceiling. This has resulted in a cooling off of the overheat-o-meter. While there’s some downside risk, overall, we’re near local lows of speculative overheat.

Floor Price” is an estimation of the minimum price that Bitcoin can drop to under current capital flows into the Bitcoin network, while the Overheat-o-meter is simply how high the traded price is above the floor.

Macro: A miners roadmap to where we are

While we’re waiting for consolidation to complete, it’s timely to revisit the longer term macro cycle and get a read on where we sit inside of it.

Miners are now surpassing peak revenues last seen in at the top of the 2017 bull market. Historically, when miners pass prior all-time-highs in revenue, price goes through a very strong consolidation band marking a kind of “halfway point” in the bull run.

Through this lens, as seen visualised in the chart above, Bitcoin is now setting up for its second leg of its bull run of 2021.

Macro: Top Price model

While it’s too early to gauge accurately where this bull cycle may top out, the current trajectory puts us comfortably on track for above $300k. That’s with the assumption that this cycle finishes in December which is an educated guess based on historic tendencies.

In terms of our progress to reaching the top of the market, the red line in the chart above visually traces our approach.

This BTC chart is post report and goes to validate if this report conclusion was accurate. Note the vertical line, is based on the date of this report

Willy Woo  Apr 20 AUTHOR

Update, I wanted to put out a letter but I’m bandwidth constrained.

Lots of fear in the market. I think every technical trader on Twitter is in a bearish stance.

– Leverage is purged from the system. Funding rates for longs at lows, open interest took a big hit meaning leverage contracts are at recent lows.

– net flows at the exchanges are bullish synonymous with dip buying on spot exchanges, lots of withdrawals coming out of exchanges. I will note that this data has been more unreliable recently, exchanges (both Bitstamp and Binance) have been using new previously unlabelled wallet addresses which is throwing off data.

– Rick Astley is a very strong buyer here. At all time highs. (Buyers who have minimal history of selling)

– Very large numbers of new users coming onto the network, very strong growth in the last 2 weeks. The dip has not deterred people new to BTC coming into for the first time.

– Whales Dolphins Sharks (100 – 5000 BTC holders) are holding their position steady. Smaller holders are steady or in accumulation.

– I’m keeping eyes on the hash rate and looking for recovery, not sure when power will be restored there for the majority of Chinese miners. For those out of the loop, this is a collapse in price resulting from Chinese miners going offline:




Floor: $50.3k **

Overheat-o-meter: 9.5%

NVT Price: $52.9k

** if you’re trading in this environment allow 7.5% below the floor for intraday wicks, this is the rule of thumb for daily lows for 2021 bull market so far.

I’ve been a buyer at these levels.

There’s a lot of FUD in the market, on-chain signalling close to floor, fundamental metrics are stellar. These are zones where its great to buy if you’re an investors.

Note: if you’re doing this with leverage then you’re a trader and you need to be responsible for your own risk management. We just had $10b of trader carnage. There is some room for downside but not that much. The lowest we’ve pulled back in 2021 has been 4.3% above the floor.

Overall it’s a waiting game for this to turn around, primarily I’m interested in hashing power returning to the network.


86 replies by Willy Woo and others

Willy Woo  Apr 25 AUTHOR


Floor price hit 50.0k and so did price at the last daily close (24th April). The capital flows into the network which this model is based on is starting to form a bottom pattern, so it’s quite likely the bottom is very close, or already in.

This is the first time we’ve hit the floor in 2021 that’s to say the overheat is 0% as close to the organic price that long term investors will support. In 2017 it hit 3x.

Bids are stacked in the order books below this price.

Speculative longs have been reset. Funding very neutral. Contracts in the system at local lows, unseen in a month. Zero speculative overheat on derivative markets.

Entity-adjusted-SOPR is very close to a full reset, the coins being moved between investors are carrying minimal profit; the market will need to be willing to sell coins at a loss to take prices lower (not seen much in a bull market), so also confirming we are very close to a bottom.

Exchange flows were heavily bearish 21st – 23rd April (which cause the very quick dump) reversed into buying yesterday. The reaction of the market was very fast this week, the fastest I’ve seen. I take that as a sign of heightened emotion and fear. (Also evident reading some of the comments here).

The average size of withdrawals from the exchanges is larger than deposits: larger buyers, smaller sellers. Another sign of recovery.

The coins that were dumped this week were very young coins. Coins that were bought recently.

Overall: Bottom signature pervades. There may be a little down side in wicks, but overall the medium term picture looks fine for a climb.

Technical price action looks terrible (waterfall pattern forming), but we’re in an area of strong volume profile support. And fundamentals cited above has precedence.

Downside risk: If these on-chain signals fail (SOPR going negative, price slices significantly below the Floor Model), it would spell a bear market. None of the larger time frame macro signals suggests this is the case.