December 9, 2022
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Willy Woo points out the gap between on-chain data and Bitcoin prices

Interview with Mr. Woo

Willy Woo, who specializes in on-chain analysis of Bitcoin (BTC), appeared on the podcast of crypto asset (cryptocurrency) investor Anthony Pompliano on the 10th. He talked about the current state of the market, encounters with on-chain analysis, and points to watch in the future.

Background / Encounter with on-chain analysis

Woo, who has an IT background, started on-chain analysis in 2016. Immediately after, many such as NVT ratio and Difficulty RibbonUnique indexBegan to devise.

Woo has a history of hitting the 2018 plunge and the mid-2019 surge, and has a reputation as an expert in on-chain analysis in the area.

Mr. Woo describes on-chain analysis as “fundamental analysis of virtual currencies”. He explained that it is a method to clarify how investors’ funds are moving and to reach a conclusion based on that.

He said that while technical analysis is suitable for identifying short-term price movements, on-chain analysis is good for long-term analysis when technical indicators and fundamental (on-chain) indicators conflict.

Current market price

Mr. Woo points out that the current cryptocurrency market is far from price and fundamental (on-chain data). While data on the chain suggests a bullish sign, prices are all down and valuable.

As reported in CoinPost’s weekly data report, Willy Woo hasn’t changed his bullish stance in recent months when prices have been declining.

In early July, it was reported that the amount of Bitcoin held by large address groups holding 1,000 to 10,000 BTC increased sharply. “Whales” are buying up BTC.

Also, in late June, the SSR oscillator, which shows the purchasing power of Bitcoin devised by Mr. Woo, is on the rise. He explained that the inflow of funds from Stablecoin to Bitcoin is returning.

What is SSR

SSR(Stablecoin supply ratio) is an index created for the purpose of visualizing the effects of Bitcoin prices, legal tender and stablecoins. Calculated by dividing the BTC supply amount by the stablecoin supply amount displayed in BTC denominated, and shows the purchasing power in stablecoin denominated.

Invented by renowned on-chain analyst Willy Woo.

▶ ️ Cryptocurrency Glossary

Relation:Bitcoin repurchase trend or virtual currency market read by data

“Difference (branch)” between on-chain data and price

Woo explained that in October 2020, the BTC chart and on-chain were as far apart as they are today.

Bitcoin at that time plummeted by nearly -20% from $ 12,000 to $ 10,000. According to Woo, the correlation with the stock market may have been disqualified as a refuge (alternative) asset in the Corona epidemic.

He pointed out that the point of interest at this time was that long-term holders continued to buy and collect BTC in inverse proportion to the decline in the market price. He said there was a slight time lag before the supply shock was reflected in the spot price. (Bitcoin price subsequently exceeded $ 20,000 in December)

Bearish sentiment

In addition, Woo explained that the market is currently in a short-term “Accumulation” phase during the bull market. While the bearish sentiment of cryptocurrencies is conspicuous on SNS, the “gap” between prices and bullish on-chain data will be closed if a big event occurs.

However, Woo said the current bull market is in a different phase than ever before. Markets such as futures, derivatives, options, ETFs and loans are becoming more complex and more developed, and price movements are unpredictable.

Woo said that on-chain analysis is suitable for getting a sense of the market as a whole, while prefaced that unexpected events such as Tesla’s BTC settlement cancellation in May cannot be predicted.

On top of that, he said that if the bearish feeling of SNS increases further in the future, the bearish sentiment will bottom out and the market will be ready to rebound.

Future attention points

As a long-term focus, Woo looks at trends in sovereign wealth funds managed by the national government.

Currently, Singapore’s sovereign wealth fund is investing in cryptocurrencies, and it is expected that El Salvador in Central America, which passed the Bitcoin law, will also hold Bitcoin as a nation. In the future, the government-level holding trend will also be a point of interest in the market.

Mr. Woo pointed out that there is not enough “bias” to cause short squeeze because the market will change the situation in the future. Bitcoin futures unsettled open interest (OI) is also not enough to wipe out the latest FUD.

What is FUD?

Abbreviation for Fear, Uncertainty & Doubt. It refers to the act of distrusting the public’s perception by spreading unconfirmed information.

▶ ️ Cryptocurrency Glossary

Mr. Woo cites (1) mining FUDs (such as adverse effects on the environment) and (2) China’s cryptocurrency regulations as FUDs currently flowing in the market.

Relation:What is Bitcoin Mining doing? Video explanation of the mechanism

On May 13, Tesla CEO Elon Musk announced that Tesla would stop accepting Bitcoin payments. Concerned about “increasing fossil fuel usage in cryptocurrency mining,” the debate over the environmental impact of cryptocurrencies reignited.

After that, in late May, the Financial Stability and Development Committee of the State Council of the People’s Republic of China launched a system to strengthen the crackdown on virtual currency mining and transactions, and it became necessary for businesses to withdraw one after another from China, which was a major base for mining.



Author: Noah Sakamaki
reference:Pomp Podcast

Images used under Shutterstock license
“Cryptocurrency” means “cryptographic assets”

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