Bitcoin (BTC), Like Gold in 2008, Will “Flash Dump” But “Moon Afterwards” Says Expert Crypto Analyst

Omar Faridi
  • Bitcoin (BTC) will “have a bull run” after its value drops significantly due to a “flash dump”, says experienced crypto analyst Willy Woo.
  • Woo had accurately predicted on May 25th that BTC’s price would drop below $6,000.

Willy Woo, an experienced cryptocurrency analyst, had accurately predicted via Twitter in May that Bitcoin (BTC) would drop below the $6,000 mark before it would exhibit any signs of recovery.

Woo also noted in late May that BTC may not sustain the $7,000 price level. The crypto researcher remarked:

I think we are gonna go to $5500-5700 next, I can’t see $7000 holding. Most likely we’ll balance a bit, then we’ll slide through. Long time-frames here, looking into June for rough timing of this to play out at a best guess.

“$5000s Is A Very Strong Support Band”

Woo had further predicted that BTC’s price would probably not dip below $5,000 within the same period. His comments on bitcoin’s price movements 

“I don’t necessarily think we’ll fall through the 5000s… sure it’s a possibility but it doesn’t have to. It’s not a repeat, it’s not Mt Gox and Willybot pushing up price with faked orders, we aren’t detoxing from a scam bubble. Technically $5000s is a very strong support band.”

On June 29th, BTC had fallen to its lowest value we’ve seen this year when it was trading at around $5,800-$5,900, according to data from CryptoCompare. Then about three weeks after hitting its low point, bitcoin’s price surged past $8,000 on July 24th.

Now though, it appears that this was fairly short-term bullish momentum given that BTC is currently trading well below the $8,000 mark at only $7,671.65 at the time of this writing. Notably this significant drop in bitcoin’s price took place in just 48 hours.

“Flash Dump” Ahead For BTC, But “Moon Afterwards”

Given current trends in the crypto market, Woo has now made some more predictions. He stated on August 1st that Bitcoin will likely drop further because of a “flash dump”, but “then moon afterwards, just like Gold in WFC [Wall Street Financial Crisis] 2008. Flight to safety: everything else sells off to USD, then used to unwind leveraged positions, then afterwards havens like Gold and BTC have a bull run.”

Woo also remarked that moving forward, bitcoin’s value would depend on whether institutional investors make substantial investments in the cryptocurrency market. The Forbes contributor said, “Probably also contingent on how many institutional players are in the BTC market over that period. Normal retail HODLers won’t tend to have large leveraged positions to unwind from, apart from maybe mortgages.”

Crypto Trading Tips From Willy Woo

Woo offered some advice on crypto trading as well:

When in bear, stay in USD as a base currency, then short (and long with extra care). When in bull stay in BTC and do vice versa.”

Notably, the veteran crypto investor often uses the NVT signal/ratio to predict bitcoin’s future performance.

The Standard NVT ratio is calculated by dividing Network Valuation by the Transactional Value on a blockchain network, and then “smoothed using a moving average”, according to Woo, who introduced it last year: "The moving average [is then applied] … to the volatile Transactions component only without smoothing the already stable Network Valuation component.”

How Bakkt Can Bring the Crypto Space an Institutional Investor Influx

Cryptocurrency enthusiasts have for years been waiting for institutional investors to enter the space. While the introduction of bitcoin futures contracts on regulated exchanges in late 2017 didn’t gain a lot of traction, but Bakkt may.

Bakkt is a long-awaited bitcoin futures exchange and on-boarding platform from the Intercontinental Exchange (ICE) - the parent company of the New York Stock Exchange – and it’s set to launch this year. Bakkt itself has remained tight-lipped over the precise launch date after delaying its launch last year, with ICE CEO Jeff Sprecher in February simply saying “later this year.”

It’s possible that this quarter may see the launch or at least more news about when the exchange is finally coming. At the end of March, Bakkt CEO Kelly Loeffler explained:

While we’re not yet able to provide a launch date, we’re making solid progress in bringing the first physical delivery price discovery contracts for bitcoin to the U.S.

Bakkt’s launch could be a major milestone for the cryptoasset industry. A venture backed by Microsoft and Starbucks, its institutional pedigree alone will switch many cautious investors on. Specifically, the firm is set to help consumers pay for goods and services with cryptocurrencies, with Starbucks being the flagship retailer in its arsenal.

Bakkt’s Bitcoin futures contracts will be the first physically-settled derivatives on a regulated trading platform. This means investors will receive the contract’s underlying asset, bitcoin, when it expires.

Currently the Chicago Mercantile Exchange (CME) offers cash-settled bitcoin futures contracts, meaning investors get the equivalent of BTC’s value in fiat when the contracts expire. This is seen by some as a major development in the cryptocurrency space, as it shows traditional finance is willing to interact with the nascent cryptoasset industry.

It’s worth noting that earlier this year the ICE’s CEO called Bakkt a “bit of a moonshot bet,”  as it was organized in a way “very different than the way ICE typically does business.” The firm has its own offices and management team, and could undergo more rounds of financing in the future.

Bakkt And a Potential Bitcoin ETF

What’s significant about Bakkt’s launch beyond this, is that it may bolster the chances of a Bitcoin Exchange-Traded fund (ETF) being approved. Such a product would make it easier for institutional investors to gain exposure to cryptocurrencies.

In August, the US Securities and Exchange Commission (SEC) rejected nine other ETF applications, in particular highlighting how those applying hadn’t provided evidence that “bitcoin futures markets are of significant size’” for an ETF to be launched.

Once Bakkt is launched its trading volumes may very well help quell the SEC’s concerns over the bitcoin futures markets’ small size as institutions and other investors may feel comfortable entering it. Larger futures contracts trading volume, increased liquidity and a well-established company involved may prove enough to convince the SEC that the time is right for a Bitcoin ETF.

Bakkt therefore represents a very significant milestone for a maturing cryptoasset industry and may well herald the “institutional influx” that many have been anticipating since 2017. Despite the markets remaining relatively flat throughout 2019 these looming decisions in the U.S. have the power to move the entire industry forward, for better or worse.