The steadfast drags by crypto fans seem to be getting to eternal gold bull Peter Schiff. Schiff who because of his bearish Bitcoin stance is seen as one of the biggest crypto influencers out there (simply because his comments get blasted by so many crypto commentators), has now tweeted more about Bitcoin in the past […]
Bitcoin price looks on track to set a new all-time high for these 4 key reasons.
Earlier today the price of Bitcoin (BTC) hit $18,815 on Binance for the first time in nearly three years. Following the breakout, BTC is on track to see a new all-time high in the near term for four significant reasons.
The factors that make a new record high likely are growing institutional demand, reduced selling pressure, a spot-driven market rally, and the significance of the $18,500 resistance breach.
Bitcoin is seeing reduced sell pressure
For Bitcoin holders to sell, they need to first deposit BTC to exchanges. When BTC exchange reserves drop, it often indicates that there is low sell-side pressure in the market.
According to data from Glassnode, the year-to-date Bitcoin balance on exchanges dropped 18%. Analysts at the on-chain market analysis firm said that BTC liquidity is continuing its downward trajectory.
This trend is significant because it shows there is hardly any appetite to sell Bitcoin at the current price level despite its rally from $3,600 to $18,700 within eight months.
Institutional demand is growing
After BlackRock CIO of fixed income Rick Reider discussed Bitcoin on CNBC, billionaire investor Mike Novogratz said BTC is now an institutional asset.
During the CNBC interview, Reider said that Bitcoin is here to say and that it has the potential to evolve. He suggested that millennials favor BTC and that the strengthening reality of digital currencies becoming mainstream payment options were both major positive factors for BTC.
Considering institutional trends, Novogratz said 2021 would likely be as good or better than 2020 for Bitcoin. He said:
“Bitcoin is now an institutional asset. Period. The good thing is most institutions aren’t in yet. It’s why 2021 will be as good or better than 2020.”
The market is spot-driven amidst a sell-side crisis
On Oct. 10, a cryptocurrency derivatives trader known as “Light” said Bitcoin is showing signs of a sell-side liquidity crisis. He noted at the time:
“Bitcoin is experiencing the beginnings of a sell-side liquidity crisis. It has always been like oil on crack. Production is entirely inelastic, demand meanwhile, is reflexive.”
The performance of Bitcoin throughout the past two quarters depicted a clear lack of sellers in the market. Particularly after the halving, which occurred in May, the declining selling pressure on BTC is a notable positive.
In addition to the decline in sellers, crypto derivatives trader, “Cantering Clark” noted that the spot market is leading the rest of the market. He said:
“Spot bid is here taking the lead.”
The spot market leading the derivatives market is important because the latter enables traders to use high leverage. When the futures market leads a bull rally, the uptrend becomes susceptible to large price movements.
Maintaining $18,000 as support is critical
On Nov. 18, Bitcoin crashed from $18,500 to around $17,200, minutes after reaching a two-year high.
The sharp rejection on the day showed that large amounts of sell orders were filed above $18,500. Today’s second breakout above $18,500 confirms that there is enough momentum in the market to break through crucial multi-year resistance levels and flip them to support.
Based on the combination of these four factors, and the fact that global central bank policies of continued liquidity injections may raise inflation, the probability of BTC securing a new all-time high soon remains high.
Bitcoin miners sold substantial amounts of BTC throughout the past two months, but on-chain analysts believe it won’t stop the next bull run.
Historical data shows that some miners began to sell Bitcoin (BTC) at the end of July, leading to increased selling pressure in the cryptocurrency market.
Eventually, the dominant cryptocurrency fell steeply from mid-August, recording a 13% fall and since then BTC has struggled to retake the $12K mark.
Bitcoin selling by miners from 2017-2020. Source: CryptoQuant
According to CryptoQuant CEO Ki Young Ju, continued selling by miners might not be enough to prevent a bull run. On-chain data analysis firms closely observe the movements of miners and whales because they hold significant amounts of BTC.
Willy Woo, an on-chain analyst, explained that miners represent one of the two external sources of selling pressure for Bitcoin. He previously said:
“There’s only two unmatched sell pressures on the market. (1) Miners who dilute the supply and sell onto the market, this is the hidden tax via monetary inflation. And (2) the exchanges who tax the traders and sell onto the market.”
When miners start selling their Bitcoin holdings, typically to cover expenses, it could trigger a correction in the cryptocurrency market.
For instance, From Aug. 17 to Sept. 5, the price of Bitcoin dropped from $12,486 to $9,813. During that time, several whales sold Bitcoin right at $12,000 and the same behaviour was observed amongst miners.
The selling pressure coming from miners and whales noticeably has been attributed to the current crypto market slump but in the longer term, Ki explained it is not enough to stop a prolonged bull run.
If miners abruptly sell a significant amount of BTC, it could cause a severe correction as a small price movement could trigger liquidations from heavily-leveraged traders. Hence, even a relatively small sell-off by miners could theoretically cause massive price swings.
Ki says the intensity of the sell-off from miners was not strong enough to halt future bull runs. He said:
“Miner Update: Some miners began selling at the end of July, but I think in the long-run, miners didn’t sell BTC large enough to stop the next bull-run.”
According to ByteTree, the net inventory of Bitcoin miners declined by 125 BTC per week in the last 12 weeks. The data indicates that miners sold approximately $1.362 million BTC per week week atop the BTC that they mined and sold.
Amount of BTC mined and sold in the last 12 weeks. Source: ByteTree
As Ki emphasized, the data shows that miners sold substantial amounts of BTC, but not in amounts that were irregular to normal behaviour.
Post-halving bull cycle remains a possibility
Bitcoin is still hovering above the critical $10,000 technical support level despite multiple attempts by bears to drop the price below the key level.
The resilience of Bitcoin amidst a heightened level of selling pressure suggests a cautiously bullish trend in the long term.
The Bitcoin short-term holder NUPL. Source: Glassnode
“Short-Term Holder Net Unrealized Profit/Loss (STH-NUPL) with a #bullish signal here imo. That bounce of the 0-line was important, is very characteristic for previous bull markets, and historically a good buying opportunity.”