Bitcoin’s most ‚organic‘ rise for years: trader explains why a top blow-off is unlikely

On-chain analyst Willy Woo presents three reasons why a top blow-off is unlikely in the short term for Bitcoin

Despite the steep rise in Bitcoin (BTC) in November, the price is consolidating above $15,000: on-chain analyst Willy Woo says a top blow-off is unlikely for three main reasons.

The three factors are the increasing outflow of funds from exchanges, the increase in the number of „HODLer,“ and data that investors have already cashed in profits.

Bitcoin moves from exchanges to individual wallets
According to the data provided by Glassnode, at the end of October a large quantity of Bitcoins abandoned the centralised exchanges.

Woo claims that this parameter is positive as it shows that investors are transferring funds from trading platforms to personal wallets. Therefore, it seems that users are more inclined to retain their BTCs by following a long-term investment strategy.

Net Bitcoin flows on exchanges

During this period, the analyst points out, we have seen the highest number of Bitcoins moved by exchanges in the last five years:

„An incredible amount of coins has been withdrawn and transferred on individual wallets. Widening the view to put it into perspective, this is the largest daily movement in this chart over the last 5 years“.
The number of „HODLer“ is increasing
In the cryptocurrency market, analysts refer to long-standing Bitcoin owners as „HODLer. These investors tend to hold BTC for extended periods of time, often longer than a year.

Prior to the sharp rise that led Bitcoin to new multi-year highs, Woo reported a significant increase in the number of HODLers, peaking in October 2017, just months before BTC’s all-time high in December. Woo commented:

„Before this rise, the influx of new HODLer seen on the blockchain was skyrocketing. I repeat, skyrocketing, I’m not joking. An adoption of this magnitude was last seen in October 2017; a month before BTC entered its chaotic phase“.
The high number of HODLer is an important parameter because it shows genuine retail demand underlying a bullish trend. An increase in BTC driven primarily by the futures market could be vulnerable to a strong pullback.

The risk of a severe correction is lower
Bitcoin’s Spent Output Profit Ratio (SOPR) indicator shows whether investors are cashing in their unrealized profits.

According to Glassnode’s data, a rather high number of investors have cashed in their profits over the last week. This suggests that the threat of a strong correction due to the sale of realized gains is minor, as investors have already started to cash in their profits and the coins sold have been absorbed by buyers.

The Bitcoin SOPR indicator
The Bitcoin SOPR indicator. Source: Glassnode
Based on the three factors described, Woo pointed out that he does not expect a top blow-off. This term refers to a technical training in which the price of an asset collapses rapidly after touching a strong resistance level. Woo explained:

„General conclusion: I do not foresee a top blow-off. I am waiting for the consolidation to be completed, then a further bullish movement“.
In the short term, the risk for Bitcoin’s current growth remains the overcrowded derivatives market. Therefore, analysts expect a consolidation phase but not a serious correction, at least for now.