On-chain analyst Willy Woo says there is a “cascade” of liquidations that is about to begin when Bitcoin (BTC) reaches $72,000.
Residential tells his 1.1 million followers on the social media platform
Woo also looks at the Bitcoin macro oscillator (BMO), a composite of four signals: the market value to realized value (MVRV), the volume weighted average price (VWAP), the cumulative value days destroyed (CVDD) and the Sharpe ratio.
MVRV is the ratio of Bitcoin’s market capitalization to realized capitalization (the value of all BTC at the price they were purchased at) and is used to assess whether the crypto asset is undervalued or overvalued.
VWAP represents the average traded price of an asset during the day, taking into account both volume and price. Traders use the VWAP to help them determine whether an asset is trading underbought or overbought based on its intraday price action.
The mint days destroyed metric looks like on the value of each Bitcoin transaction, with weight given to the number of days since the coins were last moved. The CVDD tracks the cumulative sum of the mint days destroyed in relation to the market age.
The Sharp ratio The goal is to compare the return of an investment with its risk, by dividing a portfolio’s excess return by a measure of its volatility.
Woo explains,
“These 2.5 months of consolidation under rising demand have been very good for Bitcoin, meaning the price has more room to rise before it peaks.
Chart: BMO drops 1 level, now needs to rise another 2-3 levels before reaching a macro market top.”
BTC is trading at $71,121 at the time of writing.
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Generated image: Midjourney