Veteran on-chain analyst Willy Woo is warning that Bitcoin (BTC) may have a market correction if one key event does not happen in the near term.
Woo tells his 1.2 million followers on the social media platform X that Bitcoin needs to print new all-time highs or the flagship crypto asset may flip bearish.
“If we don’t get further highs soon, BTC will be setting up for bearish divergences on longer range charts at a time when capital inflows have been weaker than normal with speculation running too hot. If that happens we will need to wear out another wave of profit taking.”
However, the analyst says that the Bitcoin Risk Signal, which gauges whether BTC is at risk of a major drawdown in price, is flashing bullish, and possibly setting the flagship crypto asset up to print new all-time highs this week.
“Still, the broader picture is bullish with the risk signal dropping. If buying follows through this week, $114,000 is next in line to liquidate shorts. But right now there’s an opening for a bearish pivot.”
Woo also points out a concerning trend that Bitcoin’s spent output profit ratio (SOPR), which tracks whether coins are being sold at a profit or loss, indicates investors are sitting on substantial profits, suggesting they may be inclined to sell at any sign of a downturn.
“Speculation is going nuts on BTC at a time when there’s plenty of investor profits to take (SOPR). Reminds me of ‘be fearful when others are greedy.’ A lot comes down to how much buying happens this week when US markets open after a long weekend.”
Lastly, Woo says that investors buying Bitcoin has slowed for the first time since its massive breakout to new all-time highs, suggesting the potential for a bearish reversal.
“Capital flows into the network was very flat the last three days. This is an unusual lull in buying on our run from $75,000 to $112,000.”
Bitcoin is trading for $107,948 at time of writing, down 1.1% in the last 24 hours.
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