On-chain analyst Willy Woo claimed that Bitcoin (BTC) would cross the $ 42,000 resistance mark in its upcoming attempts.
The researcher based his bullish analogy on what’s called the Rick Astley indicator, a heat map that tracks investors – the Rick Astleys of the world – who buy Bitcoin in order to hold the asset for longer periods of time.
The indicator previously predicted bitcoin price spikes based on investor buying activity below certain technical resistance levels.
Investor buy-and-hold habits tracked using the Bitcoin On-Chain Heatmap. Source: Willy Woo
However, Woo noted that the “strong long-term investors” are absorbing bitcoin supply below $ 42,000, increasing the cryptocurrency’s prospects for a deal above that level.
90-day moving average of Bitcoin moving on Rick Astley, who is about to turn bullish. Source: Willy Woo, Glassnode
“Strong HODLers took this opportunity to collect large amounts of coins while we are below the resistance line,” Woo tweeted.
The statements came a day after Bitcoin reclaimed its $ 40,000 psychological resistance level as support.
BTC stayed above the lower price limit on Friday despite the looming profit-taking determination. It hit an intraday high of $ 41,191 before correcting to $ 40,360 at 12:05 UTC.
Bitcoin’s upside prospect looked limited due to its tendency to reject bullish breakout attempts above the $ 40,000 to $ 42,000 range. In detail, the BTC / USD exchange rate increased after the infamous crypto crash of Sept.
Bitcoin stayed below the resistance level of $ 42,000. Source: TradingView.com
But each time, strong selling pressure in the region causes BTC / USD rates to dip towards the $ 30,000- $ 35,000 range.
Supply bottlenecks underway
Woo’s upward projections also carried the undertone of supply scarcity – a situation where the number of bitcoin supply available falls below cash market demand, resulting in higher bids.
Related: This bullish bitcoin options strategy targets $ 50,000 with no liquidation risk
Woo used his own “Liquid Supply Shock” indicator to conclude that the markets had run out of Bitcoin.
Bitcoin supply shock in terms of its price. Source: Willy Woo
In detail, Liquid Supply Shock is the ratio of coins that traders cannot buy and coins that they can buy. Woo calculates the supply shock by dividing the coins from strong investors by the coins from speculative investors.
“Coins are rapidly disappearing from the available market as strong holders continue to lock them up for long-term investment,” said Woo, adding that supply shortages could push Bitcoin to $ 55,000.
“I haven’t seen such an opportunity for such a supply shock since the fourth quarter of 2020, when BTC was set at $ 10,000 only to be revalued to $ 60,000 in the months that followed. Our supply shock is still in play as higher prices are expected. “
The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every step of investing and trading involves risk, so you should do your own research when making a decision.