By
Bena Ilyas
April 18th, 2024
Analyst Willy Woo explains the supply-demand valuation model that predicts that Bitcoin can easily gain more than 5% from the current levels.
In an important breakout, the world’s largest cryptocurrency Bitcoin (BTC) has surged 4% in the last 24-hours moving past $51,750 levels. Amid the recent altcoin mania, Bitcoin has continued to post steady gains. Besides, BTC has come into limelight with its recent address activity picking up strongly. However, based on the “supply shock valuation model” Bitcoin conservative target to the north is $55,000.
Supply Shock valuation model.
Uses a look-back algo to determine what the market priced BTC at prior demand and supply situations.
Currently puts BTC above $55k.
It's conservative as one of the SS metrics, exchange SS, is now above all-time-high so no look-back is possible. pic.twitter.com/zMuI6AcvZI
— Willy Woo (@woonomic) September 5, 2021
Interestingly, just as Woo predicted this, Bitcoin managed to give closing above its key resistance levels of $51,570 on Sunday, September 5. It means that the price action has aligned with what the analysts think.
Supply shock basically considers the ratio of the unavailable BTC supply to the available BTC supply. The valuation model relies on an algorithm that compares similar supply and demand situations as of now.
As mentioned in the above tweet Woo states that “it’s ($55K) conservative as one of the SS metrics, exchange SS, is now above all-time-high so no look-back is possible”.
Bitcoin Supply Shock and Its New Target
Willy Woo notes that the supply shock equation can have several quantitative interpretations. Thus, he further categorizes them into exchange supply shock, liquid supply shock, and long-term holder supply shock. In the blog post explaining this last month, Woo noted:
A more nuanced way would be to wave a magic wand and gauge the intent of investors before the bids and offers are even placed. In this view of demand and supply, an investor who has no intention to sell is on the demand side while an investor who is willing to sell is on the supply side.
The recent BTC price surge has forced analysts to predict higher price targets for the world’s largest cryptocurrency. Some of the top market analysts have been confident about Bitcoin touching $100K target levels by the year’s end. In his recent tweet author of Stock-to-Flow (S2F) model Plan B notes:
“Baseline S2F forecast of $100K by Christmas still stands (or more precise: $100K average for this halving period 2020-2024) On-chain (non-S2F) indicator shows no sign of a top yet (no red dots). This is in line with S2F forecast”.
#Bitcoin currently at $50,400
Baseline S2F forecast of $100K by Christmas still stands (or more precise: $100K average for this halving period 2020-2024)
On-chain (non-S2F) indicator shows no sign of a top yet (no red dots). This is in line with S2F forecast pic.twitter.com/1lGguuhyST
— PlanB (@100trillionUSD) September 5, 2021
After slipping under $30,000 levels in mid-May, Bitcoin (BTC) has registered strong gains. It has gained 66% since then in the last 50 days. As of now, the immediate resistance for Bitcoin is at $52,000 levels.