Bitcoin (BTC) hit $ 19,000 on November 24, the first time since the record in December 2017. There are three main reasons for the strong growth in cryptocurrency.
The most important factors contributing to the steady growth of Bitcoin are the increase in the number of whales, the decline in the exchange supply and the trend of explosive volumes.
Whales are still hoarding bitcoins
During November, the Cointelegraph reported that whale populations were steadily rising as the price of bitcoin rose.
These combinations appear when bitcoin whales buy BTC at a certain price and do not move it. Analysts interpreted this as an indicator that the whales are accumulating and that they will not sell in the near future.
The difference between Bitcoin’s sustained rally and previous price cycles is that the recent increase has proven to be more sustained. In fact, each group of whales shows that each major level of support that has been recovered has been accompanied by an increase in whale numbers.
On November 18, when the bitcoin price fell to $ 17,200, Whalemap analysts said the new whale support was $ 16,411. They said:
Bubbles refer to the prices they currently hold on BTC whales. Bubbles also visualize support levels. Last time we jumped $ 15,762 and increased the price by 15%. Will the new $ 16,411 bubble last this time as well? ”
Since then, Bitcoin has fallen below $ 18,000 several times, but has since accumulated above $ 18,800, while maintaining strong momentum.
In addition, data from Santiment, a cross-network 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 number of bitcoin whales with at least 10,000 coins (currently $ 185 million or more) has risen to 114 in the last two days as prices have risen above $ 18,000. In addition, the number of owners reached at least 1,000 BTC ($ 18.5 million) 2449 NOTE! ”
The Bitcoin offer is declining
One of the persistent trends throughout the bull cycle in 2020 has been the steady decline in bitcoin foreign exchange reserves.
Investors and whales place BTC on stock exchanges when they want to sell BTC. Consequently, the recent reduction in foreign exchange reserves means that there are fewer sellers in the market.
A pseudonymous trader known as the “Byzantine general” said that every time spot exchanges increase their Bitcoin holdings, they accumulate. He said:
“Every time spot exchanges add USD BTC to their holdings, they are almost immediately depleted. Do not you understand? There are not enough reserves. ”
The size is growing
Institutional and immediate exchanges have grown rapidly since September. Open interest in bitcoin futures and options on the Chicago Mercantile Exchange exceeded $ 1 billion dollars in November, and the BTC / USDT pair consistently generated over $ 1.5 billion dollars in daily volume.
Various data also show that the spot market led growth, not derivatives or futures markets. This trend makes the rally more stable and reduces the risk of a major correction.
When the futures market accounts for most of the volume during an upward trend in Bitcoin, there is a high risk of successive liquidations. This time, the spot market is leading, making it more resilient.