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The last days of September are not going well for the king of cryptocurrencies. The decline in Asian markets has hit crypto. Negativity surrounding Evergrande, the Fed’s hawkish stance, and many other negative factors are undermining risk appetite. On the other hand, the supply of Bitcoin on exchanges is at its lowest levels since 2018. So what does this mean?
Bitcoin Historical Data
The ready-to-sell Bitcoin supply on exchanges is at its lowest levels since 2018. However, a popular crypto analyst claims that this is not necessarily a good thing. In fact, he admits that he no longer sees it as a catalyst for price increases.
According to Willy Woo, the founder of statistical platform Woobull, the “synthetic” nature of BTC balances on exchanges does not make the king of cryptocurrencies scarce.
“Does buying BTC inventory on exchanges lower the price? NO! This is a misconception. It has been happening throughout 2022. There is no supply shock because synthetic BTC inventory has been added through futures markets. The market bottomed out when futures markets relaxed.”
Woo believes that the approval of a Bitcoin spot price exchange-traded fund (ETF) in the US could be a good way to “fix” the issue.
Bitcoin Paper BTC Not Driving the Price Up
Willy Woo voiced his opinion on “paper Bitcoin” at an event this month. And yes, this description highlights a truth that investors have been reluctant to see for a long time. Futures trading has restricted price performance since 2019.
Woo added that in early 2022, futures trading distorted the market’s perspective before BTC/USD reached its lowest level in two years of $15,600.
“In early 2022, I saw on-chain (spot) flows as a rise and thought the market was rising, while futures trading was telling a completely different story.”
The elephant in the room story is famous, so I won’t go into the details. According to the analyst, what drives the spot price is the direction in futures trading, and for the king of cryptocurrencies to experience historical bull runs again, approval of a spot ETF is needed.
Shall we talk about some good things too? Another analyst, Moustache, claims that the current levels could be the last opportunity to buy the bottom.
Moustache, who uploaded a chart comparing the current situation with 2020, also highlighted the “fascinating” similarities in Bitcoin’s relative strength index (RSI). The analyst said that 95% of investors have expectations for a bottom that will not happen. These words actually bring to mind the days when analysts were giving $2000 targets for BTC in 2020 but couldn’t make purchases.
