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The price of Bitcoin (BTC) reached $ 19,000 on November 24 for the first time since the historic rally in December 2017. Three key reasons underpin the strong momentum of the dominant cryptocurrency.
The main factors supporting BTC’s ongoing rally are the buildup of whales, the decrease in exchange supply, and explosive volume trends.
The whales are still piling up Bitcoin
Throughout November, Cointelegraph reported that clusters of whales were forming steadily as the price of Bitcoin rose.
These clusters emerge when Bitcoin whales buy BTC at a certain price and don’t move them. Analysts have interpreted this as a sign that whales are piling up and that they have no plans to sell in the short term.
The difference between the ongoing Bitcoin rally and previous price cycles is that the recent uptrend has proven more sustainable. In fact, every whale cluster shows that every major level of recovered BTC support has been accompanied by an accumulation of whales.
On November 18, when Bitcoin fell as low as $ 17,200, analysts at Whalemap said the new whale support stands at $ 16,411. They She said:
“The bubbles indicate the prices at which the whales have bought the BTC they currently hold. The bubbles also display support levels. Last time we went from $ 15,762 and had a 15% price increase. Will the new bubble at $ 16,411 hold up again this time? “
Since then, Bitcoin has seen many more falls below $ 18,000, but has since recovered above $ 18,800, supporting its strong momentum.
Furthermore, data from Santiment, an on-chain market analysis platform, shows a similar trend. Santiment researchers found that the number of BTC whales has increased significantly in recent months. They explained:
“The amount of #Bitcoin whales with at least 10,000 coins (currently $ 185 million or more) has increased to 114 over the past two days as prices have soared above $ 18k. Additionally, the amount of holders with at least $ 1,000 BTC ($ 18.5 million) reached an ATH of 2,449! “
The supply of Bitcoin is running out
A constant trend throughout the 2020 bull cycle has been the continued decline in Bitcoin trading reserves.
Investors and whales deposit BTC on exchanges when they want to sell BTC. Therefore, the recent decline in foreign exchange reserves means there are fewer sellers in the market.
A pseudonymous trader known as the “Byzantine General” claimed that whenever spot exchanges expand their BTC reserves, they accumulate. He She said:
“Whenever spot trades add to their $ BTC reserves, they sell out almost immediately. Don’t you understand? There is literally not enough supply. “
The volume is increasing
The volume of both 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 consistently delivered over $ 1.5 billion in daily volume.
Various data also shows 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 most of the volume during a Bitcoin bullish trend, there is a great risk of cascading liquidations. This time around, the spot market led the rally, thus making it more sustainable.
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