Analysts Suggest Market Reset Could Trigger Bitcoin’s Next Major Rally

Analysts believe that the recent easing of selling pressure on Bitcoin could pave the way for the next significant rally. A market reset, flushing out excessive speculation, is seen as a crucial step towards Bitcoin potential upward movement.

The potential for Bitcoin next major rally might hinge on a recent market reset, according to leading analysts. On August 22, technical analyst and creator of the stock-to-flow model, Willy Woo, shared insights on Bitcoin inventory on exchanges, suggesting that the market could be primed for a rebound.

Woo pointed out that the bearish trend persisted until early August due to a substantial influx of around 100,000 BTC, largely attributed to sales from the German and U.S. governments and Mt. Gox distributions. He highlighted the prevalence of “paper Bitcoin”—derivatives like futures and options that do not involve direct ownership of the asset—as a factor that had been suppressing the market.

However, the market crash earlier this month may have triggered a necessary flush out of these paper Bitcoin positions and leveraged trades, which have been keeping the market depressed. Woo described this as a “healthy reset” of open value, emphasizing that it’s challenging for Bitcoin to climb when speculation is overheated. He noted that much of the speculative activity has subsided, leaving the market in a more stable position.

Woo also commented that Bitcoin price action needs to remain uneventful for a while longer to fully absorb the remaining spot BTC, indicating that the market is about 66% through this process. He described the current state as “delicately neutral” in terms of supply and demand, with the longer-term outlook remaining positive despite the ongoing consolidation phase.

In contrast, analyst Peter Brandt observed that the current bull market cycle is on track to become the longest post-halving period without a new all-time high in Bitcoin history. He suggested that this could mean a new all-time high might not be imminent in this cycle.

Meanwhile, Benjamin Cowen, founder of ITC, argued that Bitcoin is progressing as expected when compared to previous market cycles, reinforcing the idea that the current phase is a normal part of the broader cycle.

As of August 21, Bitcoin reached a weekly high of $61,800 before pulling back to just over $60,500 in the Asian trading session on Thursday morning. Despite substantial selling from governments and defunct exchanges, Bitcoin has remained range-bound since recovering from its earlier slump this month.

Analyst ‘Rekt Capital’ emphasized that Bitcoin would need to break resistance at $61,420 for the week to signal a new uptrend, marking a critical level for traders to watch in the coming days.

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