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Sunday, October 17, 2021

Bitcoin Price Reaching A Resistance Level Of $55K

According to a metric that has been measuring the supply shock of cryptocurrencies, the price of Bitcoin will soon be creeping in at $55,000. This was stated in a tweet on the 5th of September by analyst Willy Woo who believes that this could be a very conservative price estimate for the BTC/USD channel. 

Bitcoin Price Plays Catch-Up With Metrics

Although Bitcoin has not yet established itself in the resistance level of $50,000, most of the on-chain metrics have found themselves in a much more bullish environment for some time. With the joining of a supply shock valuation model, the price estimate for the cryptocurrency has gone to a sum of $55k.

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For the uninformed, a supply shock is simply the BTC supply that is unavailable which is further divided by an available BTC supply. While this may look simple on the surface, it goes much deeper as Woo has been known to use it effectively to gauge the intention of investors before the offers are placed. 

In a blog post made the previous month, Woo explained that with regards to supply and demand, an investor who would have absolutely no intention of selling would be on the side of demand while someone who wanted to sell would be on the supply side. The valuation model has further negated the use of an algorithm that would compare supply and demand situations- further creating a fair price estimate- something that would be beneficial for Bitcoin. 

Woo further clarified in his tweet that since the SS metrics usually provided data on a very conservative level, there was no look-back available for the cryptocurrency. This also referred to the ratio of Bitcoin tokens in cold storage compared to the exchanges taking place at record levels. 

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