Bitcoin Faces 15% Correction Risk as Woo Warns of Bearish Divergence

Veteran on-chain analyst Willy Woo has warned that Bitcoin (BTC) may be on the brink of a prolonged correction phase. Woo, who has a significant following on the social media platform X, has indicated that BTC has until Monday to avoid printing a bearish divergence on the weekly chart. A bearish divergence occurs when the price of an asset makes higher highs while an indicator, such as the relative strength index (RSI), makes lower highs. This divergence suggests that the asset is losing bullish momentum.

Woo's analysis is based on his proprietary data from his Bitcoin analysis firm, the Bitcoin Vector. According to Woo, BTC appears to be strong but may be "equalizing" itself after rallying faster than usual in previous months. He explains that the current situation involves technical resistance in the form of a bearish divergence playing out against strong fundamentals. Essentially, BTC has run up faster than normal and is now adjusting.

Woo also notes that while many traders still bet on the traditional halving-based four-year cycles, BTC is becoming more linked to external macro forces. He suggests that predictable, cyclical price patterns are now a thing of the past. According to Woo, BTC is transitioning to being influenced by global liquidity, making it a canary in the coal mine for global macro moves. This shift means that internal forces, such as the halving, are becoming weaker, and global liquidity is now a more significant driver of BTC's price movements.

Woo's analysis underscores the importance of understanding the broader macroeconomic factors influencing Bitcoin's price. As the cryptocurrency market continues to evolve, it is crucial for investors to stay informed about these external forces and adjust their strategies accordingly. Woo's insights serve as a reminder that even in a bullish market, there are always risks and potential for volatility. Investors should be prepared for the possibility of a correction and consider adjusting their strategies to navigate these market dynamics effectively.