On Friday, the price of Bitcoin (BTC) reached $ 18,815 at Binance for the first time in almost three years. After the breach, BTC is on track to reach a new historical record in the short term for four important reasons.
The factors that make a new record likely are the rising institutional demand, the reduction in selling pressure, a market recovery driven by the spot market and the importance of the $ 18,500 resistance break.
Bitcoin is having reduced selling pressure
In order for Bitcoin holders to sell, they must first deposit BTC on exchanges. When reserves on BTC exchanges fall, it usually indicates that there is low pressure on the seller’s side of the market.
According Dice from Glassnode, Bitcoin’s accumulated balance on exchanges fell 18%. Analysts at the on-chain market analysis firm said that BTC’s liquidity continues its downward trajectory.
This trend is significant because it shows that there is almost no appetite to sell Bitcoin at the current price level, despite its rise from $ 3,600 to $ 18,700 in eight months.
Institutional demand is growing
After BlackRock’s fixed income CIO Rick Reider discussed Bitcoin on CNBC, billionaire investor Mike Novogratz said BTC is now an institutional asset.
During the interview with CNBC, Reider said that Bitcoin is here to stay and that it has the potential to evolve. He suggested that the millennial generation favors BTC and that strengthening the reality of digital currencies becoming conventional payment options were the main positive factors for BTC.
Considering institutional trends, Novogratz said that 2021 would probably be as good or better than 2020 for Bitcoin. Him said:
“Bitcoin is now an institutional asset. Score. The good thing is that most institutions have not yet arrived. That’s why 2021 will be as good or better than 2020 ”.
The market is driven by cash sales amid a crisis on the seller side
On October 10, a cryptocurrency derivative broker known as “Light” said Bitcoin is showing signs of a liquidity crisis on the seller’s side. Him noticed in season:
“Bitcoin is experiencing the beginning of a liquidity crisis on the seller’s side. It was always like oil on crack. The production is totally inelastic, the demand, in turn, is reflexive. “
Bitcoin’s performance over the past two quarters has shown a clear lack of sellers in the market. Particularly after the halving, which occurred in May, the drop in selling pressure on BTC is a notable positive factor.
In addition to the decline in sellers, cryptocurrency derivative trader “Cantering Clark” noted that the spot market is leading the rest of the market. Him said:
“The spot market is taking the lead.”
The spot market leading the derivatives market is important because it allows traders to use high leverage. When the futures market leads up, the upward trend becomes susceptible to large price movements.
Keep US $ 18,000 as support is critical
On November 18, Bitcoin fell from $ 18,500 to about $ 17,200, minutes after reaching the two-year high.
The strong rejection on the day showed that large quantities of sales orders were recorded above $ 18,500. Today’s second breakout above $ 18,500 confirms that there is enough momentum in the market to break through the crucial resistance levels of several years and turn them into support.
Based on the combination of these four factors and the fact that central bank policies around the world for continuous liquidity injections may increase inflation, the likelihood that the BTC will secure a new historic record will soon remain high.