Anchen data analyst: Bitcoin is nearing the peak of its down cycle

Bitcoin has mostly been hovering around the $16,000 range after falling more than 20% in the last 3 weeks. Now, a prominent analyst, citing the historical data of an on-chain model, believes that Bitcoin is nearing the peak of its downward cycle; However, to start a new trend, it must fall further.

To Report DailyHoddle, the famous Chinese analyst Willy Woo has a Max Pain model that identifies the price floor of Bitcoin at the peak of a down market cycle.

Wu told his one million followers on Twitter that in the maximum pain model, he estimates the price floor by looking at the price at which 58-61% of all bitcoins are below the purchase price or at a loss.

Wu says:

The price floor of Bitcoin is approaching below the level of the maximum pain model. Historically, the price of Bitcoin reaches the bottom of its bear cycle when 58-61% of the coins are in loss (orange shade). The green shade is also adjusted for coins locked in the Grayscale Bitcoin Trust (GBTC) fund.

If we take a closer look at the chart, the model shows that the price of Bitcoin can still fall to around $12,000.

In another less strict model, Wu says Bitcoin is testing its price floor based on the Cumulative Accumulation Daily (CVCDD) indicator.

This analyst explained:

When coins are transferred from old investors to new investors, each transaction has a dollar value and also eliminates the time of the previous investor hoddling. The daily index of cumulative wasted accumulations is the cumulative total of this time value destruction as a ratio of market age, which is divided by 6 million to rank the coefficient.

Wu says the day model of wasted accumulations is based on the idea that Bitcoin tends to create new price floors as a new generation of investors enter the market.

Wu said about this:

Bitcoin is testing its price floor based on the daily pattern of lost cumulative accumulations. [این مدل] It uses the age and value of bitcoins transferred to new investors to create a price floor. Theory: When old coins (for example, purchased at $100) are transferred to new investors (for example, at $16,000), the market experiences a higher price floor.