Bitcoin price has more than doubled since its latest block subsidy halving and is now outpacing its last bull run.
Data compiled by on-chain monitoring resource ChartsBTC on Nov. 23 shows that versus its two previous halvings, Bitcoin (BTC) in 2020 is right on track to deliver major price gains.
Bitcoin price up 120% since May
Using figures from Coin Metrics and statistician Clark Moody, ChartsBTC’s Halving Index compares Bitcoin’s progress since May’s halving with the six months after the 2012 and 2016 events.
The results show that in terms of price action, Bitcoin is beating its run to 2017’s all-time highs of $20,000. Only 2012 produced quicker upside, at a time when at the halving, BTC/USD traded at just $12.
Six months after the halving, Bitcoin’s price is 2.2 times higher in 2020. 2016 was more like 1.3 times, while 2012 produced a 12-times upside in the same period.
Bitcoin Halving Index chart. Source: ChartsBTC
Waiting on an order of magnitude
The data adds fuel to the argument that Bitcoin in 2020 has little in common with how it looked three years ago. Buyers have changed and now take the form of corporate giants satisfying client demand and investing for the long term, not for speculation.
For PlanB, the quantitative analyst responsible for the stock-to-flow-based Bitcoin price models, this is all too apparent as a catalyst for further price gains.
As Cointelegraph reported earlier Monday, he believes that January 2021 could mark the start of a much more rapid appreciation cycle, which would also chime with performance after both previous halvings.
“Monday! Paypal, Grayscale and Square will resume buying today,” he mused about the habits of Bitcoin’s latest large-volume bulls.
Last week, meanwhile a comparative chart of Bitcoin “halving candles” put 2020 into perspective, showing just how much potential remained before the current halving cycle ends in 2024.
Bitcoin halving candles chart. Source: ChartsBTC
Each candle propelled BTC/USD to a price that was an order of magnitude larger than the last. 2024, therefore, should produce a $100,000 price tag if history repeats.
Title: Bitcoin is already outperforming the halving that sparked $20K all-time high Sourced From: cointelegraph.com/news/bitcoin-is-already-outperforming-the-halving-that-sparked-20k-all-time-high Published Date: Mon, 23 Nov 2020 14:24:51 +0000
Bitcoin (BTC) starts another week at near historic highs as the U.S. dollar continues to drop — what’s next?
With investors seeking safe havens and Bitcoin already seeing a demand squeeze, Cointelegraph covers the factors that could further shape price action this week.
DXY descends to familiar lows
News from the U.S. that mass vaccination against the Coronavirus may begin within a month has sent investors panicking for hedge assets.
With multiple candidates now available among potential vaccines, the mood is tending towards worldwide recovery emerging, which means the dollar becomes less appealing compared to other destinations.
“The vaccine news is favoring the view of a sooner-rather-than-later global economic recovery with the USD losing its safe haven appeal along the way,” Rodrigo Catril, a currency strategist at National Australia Bank, told Bloomberg.
“This is a risk-positive, USD-negative backdrop, especially with the Fed likely to remain ultra-dovish for some time.”
The U.S. dollar currency index (DXY), which tracks USD against a basket of twenty trading partner currencies, has fallen lows seen twice since August, with monthly losses totalling nearly 2.2%.
As Cointelegraph often reports, DXY tends to show an inverse correlation to Bitcoin, meaning protracted weakness comes in tandem with stronger BTC/USD performance.
U.S. dollar currency index 3-month chart. Source: TradingView
The outlook for the dollar remains uncertain thanks also to the risk of fresh sanctions by the White House on Chinese tech firms, details of which are expected this week.
Supply squeeze “biggest story in Bitcoin”
Within Bitcoin, the emerging narrative that buyers are simply demanding more coins than can be produced continues.
As noted previously, this is being driven by corporate entities, notably Grayscale, Square’s Cash App and PayPal, with the requirements of all three only rising with time as more clients choose to buy BTC.
The result is that miners see their block subsidies snapped up, and the only way for the buy side to plug the gap is to pay higher prices per coin.
“PayPal and Cash App are already buying more than 100% of all newly-issued bitcoins,” investment firm Pantera Capital summarized in a blog post on Nov. 21.
“Where would Cash App get their coins? That’s where the finite-supply, inelasticity part comes in: At a higher price. That is THE story in Bitcoin right now.”
Pantera included a chart of volume from ItBit, the exchange run by Paxos, the payment handler covering PayPal’s new cryptocurrency feature. PayPal alone, it added, appears already to be buying 70% of all newly-mined bitcoins.
ItBit volume chart. Source: Pantera Capital
The new status quo differs markedly from the last time that Bitcoin traded at levels near $20,000. Unlike then, various figures argue, those buying this time are by definition in it for the long run.
“At $18.5K #Bitcoin Google searches for ‘bitcoin’ have not seen an uptick. This is not a FOMO rally. It’s steady hands. Few understand this,” Gemini exchange co-founder Cameron Winklevoss tweeted on Monday.
Last week, comments from one traditional market strategist underlined the seeming lack of interest in Bitcoin from mainstream consumers. This, she told Bloomberg, had died in 2017.
Fundamentals stage a serious rebound
After its 4.82% increase last week, Bitcoin’s network difficulty is set to lead a resurgence in fundamentals in five days’ time.
Difficulty and its automatic readjustments — after every 2016 blocks — are an essential feature in Bitcoin allowing it to maintain constant block mining intervals without outside intervention and, thus, ensuring network stability.
At the beginning of November, difficulty dropped by the most in nine years in a single readjustment. This created a more accessible playing field for miners, with the expectation that increased activity would make difficulty rise again thanks to the ensuing competition.
As such, at the end of this week, difficulty should bounce upwards by an estimated 7.7%, almost reversing the impact of the previous dip and opening the path to new all-time highs.
Likewise, Bitcoin’s average hash rate — the estimated computing power dedicated to validating transactions — has hit 137 exahashes per second (EH/s), rebounding 30% since the difficulty drop.
Seven-day average hash rate’s all-time high currently lies at 146 EH/s, this appearing in mid October.
Bitcoin 7-day average hash rate 2-month chart. Source: Blockchain
PlanB: Big price gains are yet to come
Zooming out — even slightly — is still a cause for major bullishness among some of Bitcoin’s best-known analysts.
For PlanB, creator of the stock-to-flow-based series of price forecasting models, the real upside for Bitcoin is still yet to come, despite monthly gains already totalling 43%.
This is due to historical behavior after block subsidy halving events. In 2012 and 2016, upside ensued months after the halving, but serious gains came the following year — and looked more like a tsunami than a slowly increasing tide.
“Current #bitcoin price action is nice, but we are waiting for a real jump (like the red arrows early 2013 and 2017),” he tweeted alongside an annotated chart.
“IMO that will be the start of the real bull market, and indeed phase5. January 2021?”
As Cointelegraph reported, PlanB is far from alone in considering next year to be the return of Bitcoin’s halcyon days.
Bitcoin price performance with halvings highlighted. Source: PlanB
Fear & Greed slowly cools
A concerning counterargument to further gains for Bitcoin last week came in the form of worrying readings from the Crypto Fear & Greed Index.
Using a basket of factors to measure investor sentiment, the Index almost matched highs from 2019, which culminated in a significant price drop.
As of Monday, however, the metric’s current “extreme greed” rating of market sentiment is slowly beginning to ease off, dropping from 94/100 to 90/100.
Crypto Fear & Greed Index. Source: Alternative.me
“Extreme greed” refers to the rapidly deteriorating strength of investor resolve as prices increase, signalling the increasing likelihood of a sell-off.
Title: US dollar squeeze and $19K BTC: 5 Things to watch in Bitcoin this week Sourced From: cointelegraph.com/news/us-dollar-squeeze-and-19k-btc-5-things-to-watch-in-bitcoin-this-week Published Date: Mon, 23 Nov 2020 09:00:00 +0000
Alongside the high anticipation for Ethereum 2.0, the high time frame breakout and daily gas usage on Ethereum remain key positive factors.
Eth2 momentum accelerates in correlation with price
The Eth2 mainnet will launch when the number of Ether (ETH) staked in the Eth2 deposit contract address hits 524,288.
Data from CryptoQuant found that the value staked in the Eth2 deposit contract address is showing a correlation with the ETH price.
ETH price versus total value staked on eth2.0. Source: CryptoQuant
Ki Young Ju, the CEO of CryptoQuant, noted that the correlation is seemingly growing as the launch date approaches. He wrote:
“As the ETH 2.0 launch date approaches, it seems to be a growing correlation between $ETH price.”
This trend has been anticipated by analysts because of the significance of Eth2. When activated, Eth2 is expected to improve the transaction capacity of the Ethereum blockchain network.
Since nearly $300 million worth of ETH would get deposited into the Eth2 deposit contract address, it could also decrease the selling pressure on ETH over the long term.
High time frame breakout
The price of ETH broke above $500 for the first time since May 2018, breaking out from a two-year range. It has already risen above $580 since, demonstrating strong momentum and with little resistance above $620.
If ETH surpasses $620, the next high time frame resistance levels are found at $784, $915 and $1,200.
ETH/USD weekly chart. Source: TradingView.com
Traders expect ETH to hit $620 in the short term and possibly consolidate under it until the next breakout occurs.
A pseudonymous trader known as “Rookie” said ETH could hit $620 in a matter of days, as it shows strong technical momentum.
Although both Bitcoin (BTC) and ETH prices pulled back during the weekend, analysts say that TWAP algorithms could cause the momentum to resurge once again. Qiao Wang, a quant trader and analyst, wrote:
“The reason why weekends exist is to shake out the weak hands before institutional buyers turn on their TWAP algos again on Monday.”
Fundamentals are backing the rally
According to on-chain data from Etherscan, the daily gas usage on Ethereum is hovering at an all-time high.
The term “gas” refers to transaction fees on the Ethereum blockchain network. When gas usage is high, the on-chain user activity is rising.
Ethereum daily gas usage. Source: Etherscan
The increase in daily gas usage likely comes from two sources: deposits to the Eth2 address and growing number of decentralized finance, or DeFi, users.
Title: 3 reasons Ethereum’s momentum is only accelerating as ETH nears $600 Sourced From: cointelegraph.com/news/3-reasons-ethereum-s-momentum-is-only-accelerating-as-eth-nears-600 Published Date: Mon, 23 Nov 2020 10:00:00 +0000
Bitcoin (BTC) has been taking the spotlight in recent months, but altcoins have started to finally follow the number one cryptocurrency. Several large caps have been making double digits runs in the previous days, resulting in a mini altseason.
Not only has Ether (ETH) soared above $500, but Litecoin (LTC) also gained 40% in the previous week. However, XRP (XRP) is currently taking the spotlight with a daily rally of more than 20% and a new yearly high after gaining more than 50% in the past week.
XRP breaking through crucial resistance at $0.30
XRP/USD 5-day chart. Source: TradingView
The higher timeframes show a crucial breakthrough of XRP as the resistance zone at $0.30 has been providing resistance throughout the past year.
A breakthrough like this is essential for more bullish momentum because this means a new higher high and a new yearly high have been reached.
Such a higher high increases the likelihood of a new uptrend while potentially establishing a new support level at the previous resistance zone of $0.30.
If that area flips for support, a new range is established for XRP, and the trend can reverse for the first time in three years.
Essential levels to watch for in XRP/USD pair
XRP/USDT 1-day chart. Source: TradingView
The XRP price chart shows a massive move in the previous days. As an investor, you should be aware of FOMO and perhaps avoid jumping in after such a move.
This obviously includes XRP particularly after a massive FOMO candle, after which a heavy correction typically occurs.
These corrections are fascinating to watch for a buy-the-dip approach as it presents massive opportunities.
The levels to be watched are clearly above the current price where several resistances are found, with $0.4275 and $0.495 being the most critical ones.
If the price of XRP corrects, the support zone to watch for a potential support/resistance flip is found at $0.33 and the range of $0.29-0.31.
If the latter sustain support, a great opportunity for the next move could be established.
Bitcoin market cap dominance is finally showing signals of a potential top construction as it’s currently dropping. History provided interesting data surrounding this narrative. The fourth quarter is often painful for altcoins, after which a top construction is usually seen for BTC.
However, if Bitcoin starts to correct, altcoins will likely fall with Bitcoin. This would push the Bitcoin dominance back up above 67%.
Historical data shows such tops in December, which seems likely to be the case in this period.
If that is the case, altcoins will have a massive first quarter or “altseason” in 2021.
Levels to watch for in XRP/BTC
XRP/BTC 4-day chart. Source: TradingView
The BTC pair of XRP is showing clear signals for a potential reversal. Currently, XRP/BTC is testing the previous range of support for resistance. If it rejects here, a support/resistance flip would be bearish.
In that regard, there are a few levels and scenarios to watch for a potential continuation upward.
The first one is the support/resistance flip of the 0.00002250-0.00002350 sats area. This area is currently acting as resistance, but once it flips for support, continuation to 0.00003200 sats is likely.
The second scenario is the support/resistance flip of the 0.00001900 area. If that flips, a higher low is established, and a test of the 0.00002300 sats area could occur again.
In general, the market is looking more favorable by the day, which may result in massive gains for altcoins across the board in the coming months.
author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Title: XRP price soars 50% in one week to new yearly high — Watch these levels next Sourced From: cointelegraph.com/news/xrp-price-soars-50-in-one-week-to-new-yearly-high-watch-these-levels-next Published Date: Sat, 21 Nov 2020 16:28:29 +0000
The price of Ether (ETH), the native cryptocurrency of Ethereum, has surpassed $547. Following the breakout, traders are pinpointing several key resistance levels in the near term.
In the short term, traders generally foresee $600 as the major resistance area for Ether as it marked the beginning of a bearish trend starting in May 2018. As such, $600 could act as an area of interest for sellers.
But, traders also believe that if Ether surpasses $600, it would likely enter the $700 to $900 range. Above it, there is little resistance until the all-time high.
The weekly price chart of Ether. Source: TradingView.com
Ethereum’s outlook remains positive
The Ethereum network has seen numerous catalysts come into play in recent months.
First, the Ethereum 2.0 network upgrade is progressing, as a large number of Ether continues to flow into the deposit contract address.
Ethereum 2.0 is a significant upgrade to move Ethereum from the proof-of-work (PoW) consensus algorithm to the proof-of-stake (PoS) algorithm. Essentially, it removes miners from the network to optimize the settlement of transactions.
Second, on-chain data show that whales are continuing to accumulate Ether. This trend coincides with a drop in Ether exchange reserves, particularly as more holders deposit the digital asset to the Eth2 deposit contract. Researchers at Santiment wrote when Ether initially broke out of $500:
“Following in $BTC’s footsteps, $ETH has hit a 29-month high of $509. June 21, 2018 was the last time the price was this high for the #2 market cap asset. #Ethereum’s top 10 holders rising, combined with coin supply on exchanges, have fueled this rally.”
The strong fundamental catalysts for Ethereum and the favorable technical structure for Ether has traders optimistic about the near term price trend of Ether.
Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said a pullback at $600 is likely. But, above it, the trader said the road towards $900 to $1,000 is open.
Potential Ether price cycle with resistance levels. Source: TradingView, Michael van de Poppe
A pseudonymous trader known as “Rookie” similarly said that ETH to $700 by the year’s end is likely. ETH has seen a parabolic uptrend since July 2020, raising the probability of a prolonged rally bridging over to 2021.
Will Ether follow Bitcoin price?
During the 2017 rally, when Bitcoin neared $20,000 across major exchanges, altcoins were relatively stagnant. Ether and other major cryptocurrencies saw explosive price movements in January 2018, after BTC had peaked.
Ether seeing renewed momentum in 2021 would go in line with the trend it saw in the 2017 post-halving cycle. Although there is little historical data to suggest that Ether and altcoins will follow the same trend as three years ago, the narrative of a January 2021 altcoin rally remains strong.
For Ether to see a prolonged uptrend, it would first need to reclaim the $600 resistance level as many analysts view this level as the biggest near term threat.
Title: Parabolic rally ‘a real possibility’ after Ethereum price surges to $547 Sourced From: cointelegraph.com/news/parabolic-rally-a-real-possibility-after-ethereum-price-surges-to-547 Published Date: Sat, 21 Nov 2020 21:42:23 +0000
Bitcoin (BTC) price dropped below the $18,000 support level on Nov. 22. This comes after BTC continuously saw high over-the-counter (OTC) and institutional volume throughout November.
BTC/USD 1-hour chart. Source: Tradingview
Data suggests that the growing institutional demand was likely one of the main catalysts behind the BTC price rally to $18,965.
According to the data from Skew, Grayscale Bitcoin Trust’s volume on OTC Markets increased significantly in the fourth quarter.
OTC Markets is a securities exchange in the U.S. that allows institutional and accredited investors to purchase various securities. The Grayscale Bitcoin Trust trades on OTC Markets, similar to an exchange-traded fund (ETF).
There is a clear difference between the ongoing uptrend and the 2017 rally. This time, Bitcoin has shown more composure and stability throughout the uptrend, consecutively reclaiming major resistance levels.
Bitcoin saw a large spike in spot volume, futures exchange open interest, and institutional demand. Yet, various metrics such as Google Trends have shown the mainstream interest for Bitcoin is relatively low.
The combination of the two abovementioned factors suggests institutions have likely been the primary driving force of the recent rally.
The heavy involvement of institutions in a prolonged Bitcoin rally is optimistic because institutions are likely to accumulate BTC with a long-term strategy.
This trend explains why most of the major dips Bitcoin saw in November were aggressively bought up. As Cointelegraph reported, Dan Tapiero, the co-founder of 10T Holdings, said “big boys will buy dips now.”
Tapiero also emphasized that real fundamentals are driving the ongoing rally, unlike the 2017 mania. He said:
“3rd wave up to dwarf the 2017 move and should persist for several years.”
Michael Novogratz, the billionaire Bitcoin investor, also said that Bitcoin has become an institutional asset along the way.
In recent months, more institutions, hedge funds, and investment banks have started comparing BTC to gold. Novogratz said on CNBC:
“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.”
3 whale clusters to watch as BTC dives below $18,000
Whales, or high-net-worth investors, typically use OTC and exchanges simultaneously to accumulate Bitcoin.
Throughout November, analysts at the on-chain analysis firm Whalemap found the emergence of major whale clusters.
Whale clusters are price levels where whales buy BTC and do not move their holdings. Clusters often signify areas where whales buy Bitcoin.
Bitcoin whale clusters throughout November. Source: Whalemap
The data from Whalemap show that $16,411, $16,278 and $15,691 remain as the big whale clusters. Hence, even if BTC sees a short-term pullback, the aggressive accumulation from whales in November has established crucial support areas.
In the near term, following BTC’s recent minor correction from $18,865 to below $18,000, whale clusters are expected to act as important support levels. The $17,300 and $16,411 price levels remain as the major support levels.
Title: Bitcoin price dips below $18K — Time to watch these ‘whale cluster’ support zones Sourced From: cointelegraph.com/news/bitcoin-price-dips-below-18k-time-to-watch-these-whale-cluster-support-zones Published Date: Sun, 22 Nov 2020 11:45:59 +0000
As of Nov. 20, companies hold around 842,229 BTC or 4.54% of today’s Bitcoin (BTC) supply, according to the Clark Moody dashboard and data from Bitcointreasuries. This is equivalent to a staggering $15.3 billion at the current price of $18,200.
Public companies and institutional investors are continuously accumulating Bitcoin. The spark that began with MicroStrategy’s ambitious $425 million BTC purchase has led to a broad institutional frenzy around the dominant cryptocurrency.
The number of Bitcoin held by corporate treasuries. Source: Clark Moody
Why are institutions and companies acquiring Bitcoin now?
The demand for Bitcoin from companies and institutions likely comes from its growing reputation as a digital store of value.
Bitcoin is unique in that it can hedge portfolios against inflation, like gold, but has the potential to see exponential growth.
Hedge assets are typically stagnant and demonstrate low volatility over a prolonged period. They are meant to operate as insurance for a diversified portfolio so that when the market dips, the portfolio is protected.
Bitcoin achieves both: it is able to operate as a hedge asset and also expose investors to large growth potential in the long term.
As such, Michael Saylor, the CEO of MicroStrategy, said Bitcoin should not be considered as a payment network nor a currency.
BTC is highly compelling as a store of value, which also does not put it in the crossfire of regulators. Referring to the interview of the United States Securities and Exchange Commission chairman Jay Clayton saying BTC is not a security, Saylor said:
“This is why Bitcoin should be neither a currency, nor a payment network. The principles of humility and harmony dictate that we should allow technology partners to provide for payments, and defer to governments on matters of currency. BTC is a purely engineered Store of Value.”
As long as the perception of Bitcoin from institutions and corporations as an established store of value remains, the demand for BTC would likely remain high.
Savings technology “orange pill” for companies
Corporations are now holding roughly 4.5% of today’s Bitcoin supply, which is around 18.5 million BTC. This percentage is relatively high considering that BTC has a total fixed supply of 21 million.
When lost or dormant coins are considered, the total supply is estimated to be around 17 million in total.
Companies acquiring Bitcoin as a treasury asset, like MicroStrategy, is particularly optimistic because it shows they are not expecting short-term returns.
Hence, when corporations hold BTC with a low time-preference, it would also result in lower selling pressure over time by decreasing the available supply.
For instance, on Aug. 11, when MicroStrategy announced its initial purchase of $250 million worth of Bitcoin, Saylor said:
“MicroStrategy has recognized Bitcoin as a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy.”
The prospect of inflation and consistent liquidity injections from central banks further fuel the medium- to long-term outlook for Bitcoin, which some analysts consider the perfect environment for BTC to shine over time.
Meanwhile, to offset the negative economic impact the pandemic has had on the financial market, regulators are continuing to create relaxed financial conditions. For stores of value, like gold and Bitcoin, such a trend is beneficial heading into 2021.
Title: Corporate Bitcoin frenzy: Companies now hold $15.3 billion in BTC Sourced From: cointelegraph.com/news/corporate-bitcoin-frenzy-companies-now-hold-15-3-billion-in-btc Published Date: Fri, 20 Nov 2020 11:13:20 +0000
A pullback in the price of Bitcoin (BTC) is likely, based on several on-chain data points, namely the Spent Output Profit Ratio (SOPR) indicator, stablecoin inflows, stacked sell orders at $19,000, and the Crypto and Fear Index. However, the question remains when that correction would occur.
Profit-taking pullback possible with lower buy pressure
The SOPR indicator essentially gauges how profitable Bitcoin holders are at the moment. When the SOPR is high, BTC is at risk of a profit-taking pullback since traders tend to sell when they are in profit.
Adjusted Bitcoin SOPR. Source: Glassnode
Meanwhile, stablecoin inflows show how many stablecoins, such as USDT Tether, are flowing into exchanges. When stablecoin inflows increase, this typically means buyer demand is rising. On the other hand, selling pressure tends to rise when BTC reserves outpace the inflow of stablecoins.
In the past several days, the SOPR indicator has reached a level that previously led the price of Bitcoin to correct such as in late 2018 and summer 2019.
On Nov. 20, Rafael Schultz-Kraft, the chief technical officer at Glassnode, noted:
“Adjusted SOPR (hourly, 7d MA) as high as it hasn’t been since July 2019. Correction incoming?”
This trend can become concerning if the momentum of Bitcoin slows. Renato Shirakashi, the creator of the SOPR indicator, said Nobel prize laureate Daniel Kahneman’s work shows investors are comfortable selling when in profit.
Hence, if Bitcoin gets stagnant or consolidates in the near term below the $19,000 resistance, a minor pullback could emerge. Shirakashi wrote:
“People, in general, are much more comfortable selling when they are in profit. In a bull market, when SOPR falls below 1, people would sell at a loss, and thus be reluctant to do so. This pushes the supply down significantly, which in turn puts an upward pressure on the price, which increases.”
The rise in the Exchange Stablecoins Ratio from CryptoQuant coincides with the rising SOPR. The Stablecoins Ratio is the Bitcoin exchange reserves divided by stablecoin reserves. When it increases, it shows that potential selling pressure is rising.
Stablecoins Ratio for BTC. Source: CryptoQuant
As such, CryptoQuant CEO, Ki Young Ju, expects a short-term, albeit not a big correction, in the short term. He noted:
“BTC potential selling pressure is going upwards, but still low. We’ll see some correction in a few days but it won’t be big. Long-term bullish.”
$19,000 stands in the way of a new all-time high
Exchange order books also show that the $19,000 level has become an important resistance area. There are significant sell orders across Bitfinex, Bitstamp, Binance, and Coinbase near $19,000, which might prevent the continuation of a rally.
Ok 19000 is kinda stacked @CryptoCobain is gonna have to pull out the big bucks. pic.twitter.com/KnNSzYYRnL
— Byzantine General (@ByzGeneral) November 21, 2020
Another possible factor that could trigger a short-term pullback is the Crypto Fear and Greed index. The index is still at dangerously high levels, which raises the probability of a correction.
The correction might come later
However, over the past several months that exchanges’ Bitcoin reserves have been in a continuous downtrend as Cointelegraph reported. This could offset a major market-wide correction, particularly if the BTC bull run accelerates triggering FOMO, which means a large influx of new buyers.
Year-to-date, Glassnode found that the balance of Bitcoin on exchanges declined by 18%. The continuous drop in exchange reserves reduces the probability of deep pullbacks, which analysts, like Ki, have consistently emphasized in November.
Bitcoin balance on exchange 90-day moving average. Source: CryptoQuant
Moreover, there are other factors that could delay the correction until after Bitcoin breaks $19,000 or potentially even $20,000.
CoinMetrics network data analyst Lucas Nuzzi found that the MVRV ratio, which tracks the realized cap of Bitcoin, is not near the level that marked previous tops.
The term realized cap refers to the Bitcoin market cap at the time investors bought BTC. If the realized cap is high, it means many investors bought BTC at a higher price.
Hence, there is a strong argument for a delayed pullback, potentially after the ongoing rally gets overextended. On Nov. 20, Cole Garner, an on-chain analyst, wrote:
“Bitcoin exchange liquidity is melting down. Institutions aren’t prepared for scarcity like this.”
Title: 4 metrics suggest Bitcoin price will correct — But can BTC hit $20K first? Sourced From: cointelegraph.com/news/4-metrics-suggest-bitcoin-price-will-correct-but-can-btc-hit-20k-first Published Date: Sat, 21 Nov 2020 12:00:00 +0000
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.
BTC/USD 4-hour chart. Source: TradingView.com
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.
The balance of BTC held on exchanges. Source: Glassnode
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.
Title: 4 reasons why Bitcoin price is on the verge of a new all-time high Sourced From: cointelegraph.com/news/4-reasons-why-bitcoin-price-is-on-the-verge-of-a-new-all-time-high Published Date: Fri, 20 Nov 2020 22:15:00 +0000
According to analysis from Edward Morra, a popular Bitcoin trader, Coinbase and Bitfinex exchange now have major buy orders above $17,200.
The emergence of major buy walls is important because on Nov. 18, BTC flash crashed to around $17,222. This shows that whales are using large buy orders to defend the $17,200 support area with strength.
Bitcoin buy wall on Bitfinex. Source: Edward Morra, TradingLite
How strong is the $17K support?
Both whale clusters and exchange order books show that the $17,000 level is turning into a major support area.
Above $18,500, there is little resistance until the all-time high at $20,000. This means if Bitcoin stays stable above $17,000, the chances for breaking out above $18,500 significantly increase.
Based on whale activity and exchange order books, it has become more unlikely that the price will drop below $17,200. For such a large downside movement to occur, a massive sell order would have to trigger cascading liquidations.
Prior to the intraday recovery of Bitcoin from $17,340 to $18,000, whales on Bitfinex were placing sell orders. Recently, Morra said that Bitfinex has seen more buy orders at the $17,000 support. He wrote:
“In case it dips, Coinbase put a lot of bids (buy orders) below current range. Surprisingly, Bitfinex that was mostly placing sell walls before now has a pretty fat buy wall below.”
Analysts at Whalemap track Bitcoin whale activity by identifying clusters and they said $17,783 and $17,651 have formed as clusters.
These ‘whale clusters’ emerge when large Bitcoin holders purchase BTC at a certain price point and do not move those funds elsewhere. Hence, if whale clusters form at $17,783 and $17,651, it shows that whales bought at those levels and are holding onto their investment.
Throughout November, many analysts have pointed to the high time frame charts to depict an optimistic short to medium-term outlook.
Kevin Kelly, the co-founder and head of global macro at Delphi Digital, emphasized that Bitcoin is on track to mark the first monthly candle close above $14,000. Kelly said:
“And if $BTC closes out November anywhere near current levels, it will mark a new monthly closing high, surpassing its December 2017 close just above $14,000.”
Even during the run-up towards the record high in 2017, Bitcoin struggled to maintain stable high time frame price action. Based on the trend and many other factors, Kelly noted stated Bitcoin is maturing. He noted:
“It’s important to remember the road to the top is never linear; significant drawdowns are inevitable. But make no mistake, this market is maturing. #Bitcoin is garnering attention from the world’s top investors. It’s permeating the inner circles of the world’s top thinkers.”
Across major Bitcoin (BTC) exchanges, large buy walls are starting to emerge. Considering that BTC’s price has recovered beyond $18,000, this trend is optimistic.
Title: Bitcoin rally set to continue after BTC whales build buy walls near $17.2K Sourced From: cointelegraph.com/news/bitcoin-rally-set-to-continue-after-btc-whales-build-buy-walls-near-17-2k Published Date: Thu, 19 Nov 2020 19:57:53 +0000