The cryptocurrency market has seen some massive bullish moves since April and many see it as the start of a bull market. However, crypto analyst Willy Woo has emerged with evidence that the current bull market isn’t organic. Using his NVT market tracking tool, Woo said the market is heading towards a massive sell-off.
If you want to see just how high the price exceeded what's normal for on chain capital flows, NVT Caps paints a very clear picture. The short squeeze pushed price mismatch to late bull market "mania" levels before the blow off today, we are still well above organic levels. pic.twitter.com/U4PeA2zCTH
— Willy Woo (@woonomic) May 17, 2019
NVT tracks the network value to transaction ratio of Bitcoin to ascertain how much value is being moved on the market to determine where the network value should be and from current indicators, Bitcoin’s network value is way above the organic level, Woo said. Historically, large variation between Bitcoin value and the NVT ratio indicates an imminent dump and the trend might repeat itself as there is such a wide variation right now.
The cryptocurrency market started recovering from the 2018 bear market from the beginning of April and has since grown steadily with increasing speed. Analysts expected the surge to slow at some points for Bitcoin but the cryptocurrency seemed to just break through every resistance with less effort than expected. This has raised a lot of questions in the minds of traders and analysts in the cryptocurrency community, not just Woo’s.
Seasoned cryptocurrency trader Peter Brandt recently pointed out that the rise of Bitcoin was too steep, steeper than he expected even though he predicted the parabola. At well over $7,000, Brandt said Bitcoin would have to correct and move at a slower pace with a gentler slope than it had at the time. Bitcoin price started dipping shortly after, recording a loss of up to 10% in the last 24 hours.
Not only Bitcoin but altcoins have also dipped and analysts say the dip was expected but unlike Woo, they expect another huge bounce after the short time out. If the NVT theory plays out, the market may be experiencing another crash that will be almost as serious as that of 2018 as Woo says we are still very far from the organic thing.
Taking a look at Coin Market Cap though, the market seems to be on its way out of the dip but how long it will take to come out is unknown. It will be interesting to see how it plays out in the next 24 hours – more dip or a bounce to 8k and above again.