Bitcoin Faces Correction Risk as Buying Momentum Slows

Veteran on-chain analyst Willy Woo has cautioned that Bitcoin (BTC) may face a market correction if it does not achieve new all-time highs in the near future. Woo, with a substantial following of 1.2 million on the social media platform X, shared his concerns with his followers, emphasizing that the failure to reach further highs soon could lead to bearish divergences on longer-range charts. This situation, combined with weaker-than-normal capital inflows and overheated speculation, could trigger another wave of profit-taking.

Woo's analysis is grounded in the Bitcoin Risk Signal, which currently suggests that BTC is at risk of a significant price drawdown. Despite this, Woo maintains that the overall market outlook remains bullish, with the risk signal dropping. He predicts that if buying momentum continues this week, the next target for liquidating shorts could be $114,000. However, he also acknowledges the possibility of a bearish pivot under the current market conditions.

One alarming trend noted by Woo is the spent output profit ratio (SOPR), which monitors whether coins are being sold at a profit or loss. The SOPR indicates that investors are holding onto substantial profits, implying they might be inclined to sell at the first sign of a downturn. Woo warns that this scenario could result in a bearish reversal, particularly if buying momentum slows down.

Additionally, Woo observes that investor buying of Bitcoin has slowed for the first time since its significant breakout to new all-time highs. This unusual pause in buying, coupled with the current market conditions, could further intensify the potential for a bearish reversal. Woo's analysis highlights the importance of closely monitoring market trends and investor sentiment to predict Bitcoin's price movements.