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The price of Bitcoin (BTC) hit $ 19,000 on November 24 for the first time since the historic rally of December 2017. There are three main reasons for the strong momentum of the dominant cryptocurrency.
The main factors supporting the ongoing BTC rally are the build-up of whales, dwindling supply of exchange, and explosive trends in volumes.
Whales are still hoarding Bitcoin
Throughout the month of November, Cointelegraph reported that clusters of whales were forming regularly as the price of Bitcoin rose.
These clusters emerge when Bitcoin whales buy BTC at a certain price and don’t move them. Analysts interpreted this as a signal that the whales are piling up and have no intention of selling in the short term.
The difference between the ongoing Bitcoin rally and previous price cycles is that the recent uptrend has proven to be more sustainable. In fact, every group of whales shows that every major level of support BTC picked up was accompanied by a build-up of whales.
On November 18, when Bitcoin fell to $ 17,200, analysts at Whalemap said the new whale support was at $ 16,411. They said:
“The bubbles show the prices at which the whales bought the BTC they are currently holding. The bubbles also visualize the support levels. Last time around we bounced back from $ 15,762 and had a 15% price increase. Will the new $ 16,411 bubble last this time too? “
Since then, Bitcoin has seen several more drops below $ 18,000, but has since recovered above $ 18,800, maintaining its strong momentum.
In addition, data from Santiment, a chain market analysis platform, shows a similar trend. Santiment researchers found that the number of BTC whales had increased dramatically in recent months. They Explain:
“The number of #Bitcoin whales with at least 10,000 coins (currently $ 185 million or more) has risen to 114 in recent days as prices have climbed above $ 18,000. Additionally, the number of holders of at least $ 1,000 BTC ($ 18.5 million) reached an ATH of 2,449!
Bitcoin’s supply is drying up
A consistent trend throughout the 2020 bull cycle has been the continued decline in Bitcoin’s trading reserves.
Investors and whales deposit BTC on exchanges when they want to sell BTC. Therefore, the recent decline in foreign exchange reserves means that there are fewer sellers in the market.
A pseudonymous trader known as “Byzantine General” said that every time spot exchanges expand their BTC reserves, they accumulate. he said:
“Whenever spot exchanges add to their $ BTC reserves, they run out almost immediately. You do not understand? There is literally not enough supply.
The volume increases
The volume of institutional and spot trading has increased rapidly since September. Open interest on Bitcoin futures and options at CME exceeded $ 1 billion in November, and Binance’s BTC / USDT pair has consistently generated over $ 1.5 billion in daily volume.
Various data points also show that the spot market led the rally, not the derivatives or futures markets. This trend makes the rally more stable and reduces the risk of massive corrections.
When the futures market accounts for the majority of volume during a Bitcoin uptrend, there is a significant risk of cascading liquidations. This time around, the spot market is leading the rally, making it more sustainable.
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