The price of bitcoin has been steadily rising since it crossed the $14,000 not that long ago. The rally, which has seen it smash past $1,000 marks in mere days now has the coin tipping $19,000 and eyeing out its previous all time high of $20,000 set in December 2017.
It has been a busy year for the price of Bitcoin which hit a low in the $3,000 mark after the full effects of the Covid-19 pandemic were felt globally. Now, however, it appears as if a few factors borne out of the pandemic have helped it recover, and then some.
There are three factors currently that appear to be driving the price towards the all time high, but these have come off the back of a weakening dollar, an up and down stock market, and monetary policies in place to try and bolster the flagging global economies.
Currently, it is worth keeping an eye on whales that are accumulating more and more Bitcoin in anticipation of the price to skyrocket and cheaper Bitcoin buying levels to not be seen for some time. Moreover, there is a drying up of supply down to whales as well as traditional institutions offering Bitcoin — like PayPal and Greyscale, Finally, volume is also surging in the derivatives market place.
Whales diving in
Bitcoin’s market cap may be over $350 billion, but it is still relatively small and can be moved and shaken by big investors, or whales. Whale clusters have been steadily forming as the price of Bitcoin has been rallying.
These clusters emerge when Bitcoin whales buy BTC at a certain price point and do not move them. Analysts have interpreted this as a signal that whales are accumulating and that they have no intention of selling in the near term.
When Bitcoin recently dropped to as low as $17,200, analysts at Whalemap said that the new whale support is located at $16,411.
They said: “Bubbles indicate prices at which whales have purchased BTC that they are currently holding. Bubbles also visualize support levels. Last time we bounced from $15,762 and had a 15% price increase. Is the new bubble at $16,411 going to hold this time as well?”
People buying up Bitcoin inevitably means less supply, higher demand, and thus higher prices. Through this rally it has been seen that there is a continuous drop in Bitcoin exchange reserves.
Investors and whales deposit BTC to exchanges when they want to sell BTC. Hence, the recent drop in exchange reserves means there are fewer sellers in the market.
A pseudonymous trader known as “Byzantine General” said that every time spot exchanges expand their BTC reserves, they get accumulated. He said:
“Everytime spot exchanges add to their $BTC reserves it gets depleted almost immediately. Don’t you get it? There’s literally not enough supply.”