Bitcoin’s (BTC) price has dropped by over 80% last year, and the value of other major cryptocurrencies has declined by as much as 99% (in some cases). According to some analysts, the digital asset market could now be ripe for a bullish run.

Willy Woo, a prominent researcher and cryptoasset analyst, recently noted via Twitter that on-chain digital currency transaction volumes were too low for prices to recover anytime soon. Woo, who accurately predicted in late May 2018 that bitcoin’s price would drop below $6,000 before showing any signs of recovery, has now argued that high levels of volatility in recent weeks could have led to the surge in on-chain volume of cryptocurrencies.

Drop From $6K To $3K Not A Sign Of Accumulation

Assessing market conditions via a tweet, Woo wrote that the “initial volume spike false signalled a faster detox and an earlier end to the bear market.” In rality, he added, it was a side effect of volatility, and the “move from $6k to $3k created immense trade volume, but it was in no way a signal that accumulation volume had begun.”

Woo also observed:

Going on to explain price movements in the cryptocurrency market, Woo mentioned that the Network Value to Transactions (NVT) ratio (a metric he developed) was currently on the higher side. This, according to the Exodus wallet advisor, means the value of on-chain transactions is considerably lower than the valuation of the network.

Bear Market Could Last Until Second Half Of 2019

The NVT ratio is used to estimate the intrinsic value of cryptoassets, which helps investors determine when the price of bitcoin and other digital currencies is too low or too high. Commenting on how the effects of the recent spike in volume caused by high levels of volatility has now subsided, Woo noted: 

That volume has since subsided. Leaving the NVT chart on the high side of its oscillation around the main move downwards. The key thing here, in my interpretation, is it's on the high side of its band, so I think an up move is limited, bears will win the longer term trade.

In November 2018, Woo also predicted that a bearish trend in the crypto market would continue, arguing that downward pressure on bitcoin could last until the second half of this year. He referenced data from NVTS, which he observed had dropped below its support levels. Last year, Woo had said BTC’s price would likely not be able to break past its 200-day Moving Average (MA).

He predicted (in November 2018):

If price (in the short term) bounces upwards here, which is certainly possible, I think the 200 day moving average is the upper band of the move. This is ~$7k right now. Remember if the price goes above the 200 DMA, in the history of BTCUSD’s 8-year trade history, it’s been a reliable indicator of a bear to bull transitions. It’s too early to transition out of the bear.

Bitcoin is trading at $3,859. according to CryptoCompare data, after recording an intraday high of around $3,972. The cryptocurrency market capitalization stands at just above $130 billion at press time.