Earlier today, the price of Bitcoin (BTC) hit $ 18,815 on Binance for the first time in nearly three years. After the breakout, BTC is on track to see a new all-time high in the near term for four important reasons.
Factors that are likely to make a new record high are growing institutional demand, easing selling pressure, a spot market rally and the size of the $ 18,500 resistance breach.
Bitcoin sees reduced selling pressure
In order for Bitcoin holders to sell, they must first deposit BTC on the exchanges. When BTC foreign exchange reserves fall, it often indicates that the selling pressure is low in the market.
According to The data from Glassnode, the year-to-date Bitcoin balance on exchanges has fallen by 18%. Analysts at the on-chain market analysis firm said BTC’s liquidity was continuing its downward trajectory.
This trend is significant because it shows that there is hardly any appetite to sell Bitcoin at the current price level despite its rebound from $ 3,600 to $ 18,700 in eight months.
Institutional demand is increasing
After BlackRock Fixed Income CIO Rick Reider discussed Bitcoin on TBEN, billionaire investor Mike Novogratz said BTC is now an institutional asset.
During the TBEN interview, Reider said Bitcoin is there to say and has the potential to scale. He suggested that millennials favor BTC and that the reinforcement of the reality of digital currencies becoming mainstream payment options were two major positive factors for BTC.
Given institutional trends, Novogratz said 2021 is likely to be as good or better than 2020 for Bitcoin. he said:
“Bitcoin is now an institutional asset. Period. The good thing is that most of the institutions are not there yet. This is why 2021 will be as good or better than 2020. “
The market is spot guided in the midst of a selling crisis
On October 10, a cryptocurrency derivatives trader known as “Light” said Bitcoin was showing signs of a sell-side liquidity crisis. he Noted at the time:
“Bitcoin is experiencing the onset of a sell-side liquidity crisis. It’s always been like oil on crack. Production is totally inelastic, while demand is reflexive. “
Bitcoin’s performance over the past two quarters has portrayed a clear lack of sellers in the market. Especially after the halving, which came in May, the lower selling pressure on BTC is a notable benefit.
In addition to the drop in sellers, crypto derivatives trader “Cantering Clark” noted that the spot market dominates the rest of the market. he said:
“The one-off auction takes the lead here.”
The spot market that dominates the derivatives market is important because the latter allows traders to use high leverage. When the futures market leads a bullish rally, the uptrend becomes sensitive to large price movements.
Maintaining $ 18,000 as support is essential
On November 18, Bitcoin went from $ 18,500 to around $ 17,200, minutes after peaking in two years.
The brutal rejection of the day showed that large amounts of sell orders had been placed above $ 18,500. Today’s second breakout above $ 18,500 confirms that there is enough momentum in the market to break crucial multi-year resistance levels and return them to support.
Based on the combination of these four factors and the fact that the World Central Bank’s policies of continuous injections of liquidity may increase inflation, the likelihood that BTC will soon hit a new all-time high will soon remain high.