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Bitcoin (BTC) Seems Undervalued, Supply Shock Indicator Says

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Today, on April 20, 2022, the Bitcoin (BTC) price managed to bounce back above $42,000. At the same time, digital gold still has room for growth, Willy Woo’s Highly Liquid Supply Shock indicator says.

What supply shocks can say about Bitcoin (BTC) price

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Top-tier Bitcoin (BTC) researcher and analyst Willy Woo has taken to Twitter to share bullish forecast on mid-term price dynamics for digital gold.

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Such a statement was made based on the Highly Liquid Supply Shock indicator, which is a version of Mr. Woo’s Supply Shock metric. Supply shock is the ratio between unavailable supply and available supply of this or that asset.

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Regarding Bitcoin (BTC), Mr. Woo describes the Highly Liquid Supply Shock indicator as the ratio between the number of coins held by long-term holders and short-term speculators.

Historically, the Bitcoin (BTC) price shows a strong correlation with Supply Shock indicator dynamics, Mr. woo adds:

At first glance you can see the Supply Shock model tracks price quite closely. A closer look shows Supply Shock leads price.

Psychologically, Bitcoin (BTC) Supply Shock indicators demonstrate the sentiment of investors: once coins are bought/sold, they migrate from the “illiquid supply” to a “liquid” one.

Bitcoin (BTC) volatility targets 17-month lows

Such a promising price action is accompanied with the record-breaking dropdown of Bitcoin (BTC) volatility.

The standard deviation of daily returns (ie, how much Bitcoin adds or loses in 24 hours) dropped below 2.5% on the 30-day average chart for the first time since mid-November 2020.

Bitcoin (BTC) volatility drops to multi-months lows
Image by BuyBitcoinWorldwide

The last time that Bitcoin 30-day price volatility was at today’s lows, the orange coin was worth $11,000.





Credit : u.today

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