Bitcoin Faces Potential Lengthy Correction Phase, Analyst Warns

Veteran on-chain analyst Willy Woo has issued a cautionary message to Bitcoin (BTC) investors, indicating that the leading cryptocurrency may be on the brink of entering a prolonged correction phase.

Key Points:

• Woo emphasizes the importance of monitoring BTC’s price action until Monday to avoid a bearish divergence on the weekly chart.
• A bearish divergence occurs when price reaches higher highs while indicators like the relative strength index (RSI) show lower highs, signaling a potential loss of bullish momentum.
• Using data from his firm, the Bitcoin Vector, Woo notes that BTC is exhibiting strength but may be readjusting after a rapid rally in recent months.
• While some traders rely on traditional halving-based cycles, Woo suggests that BTC’s price movements are increasingly influenced by external macroeconomic factors, shifting away from predictable four-year patterns.
• Bitcoin is currently trading at $104,737.

Analyst’s Insights:

According to Woo, BTC’s global macroeconomic significance is growing, making it a key indicator for broader market trends. He stresses that the cryptocurrency’s role as a barometer for macroeconomic shifts is altering traditional cycle-based trading strategies.

Woo warns that BTC’s price dynamics are evolving beyond the halving-driven cycles, with global liquidity now playing a significant role in shaping its value.

Market Outlook:

Despite the potential for a correction, Woo remains optimistic about Bitcoin’s long-term prospects, emphasizing the resilience of its underlying fundamentals.

As investors navigate the evolving landscape of digital assets, Woo’s insights offer a nuanced perspective on BTC’s trajectory in the broader financial ecosystem.

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Image credit: Midjourney