A decrease in selling pressure on Bitcoin could set the stage for its next significant price increase, according to analysts. On August 22, Willy Woo, a technical analyst and the creator of the stock-to-flow model, shared a chart depicting Bitcoin inventory on exchanges. He noted that the market had been bearish until early August, primarily due to the influx of around 100,000 BTC from sales by the German and U.S. governments, as well as distributions from Mt. Gox.
Woo highlighted that increased speculation had led to a rise in “paper BTC,” which refers to derivatives like futures and options that do not involve actual Bitcoin ownership.
A Need for Paper Bitcoin Reduction
The market dip in early August helped clear out much of this speculative paper Bitcoin and leverage, which had been weighing down the market. Woo commented, “This reset of open value (paper bets) is healthy. It’s difficult for BTC to rise when there’s excessive speculation in the market.”
Woo emphasized that Bitcoin’s market needs a period of subdued price action, noting, “BTC price action needs to become really boring,” and adding that we are “66% of the way there,” as much of the speculation has already left and more spot Bitcoin is being absorbed.
From a supply and demand perspective, Woo noted that the market has moved from short-term bearish to “cautiously neutral,” while clarifying, “Over the long term, the good news is we’re not in a bear market—just in an extended consolidation.”
Meanwhile, analyst Peter Brandt observed that the current bull cycle might soon become the longest post-halving period without reaching a new all-time high, suggesting that a record-breaking high might not be imminent. However, ITC founder Benjamin Cowen pointed out that Bitcoin’s current position is consistent with previous market cycles.
Bitcoin Price Outlook
Bitcoin’s price reached a weekly high of $61,800 on August 21, but it has since pulled back to just over $60,500 by Thursday morning during Asian trading. Despite significant selling from government entities and defunct exchanges, Bitcoin has remained within a range since recovering from its early August decline. Analyst ‘Rekt Capital’ mentioned that Bitcoin needs to break through the $61,420 level for this week to signal a new upward trend.
