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Today, Bitcoin price reached the 33-month highs to settle above $16,000. Analysts now suggest some salient reasons could have fueled the surge.
On November 12, Bitcoin surged past $16000, a level that was last seen in 2017. Coinspeaker’s data showed that after 5 a.m. ET, the price of the dominant crypto, had climbed up to $16019. Currently, it is trading at $16016.
This year alone, Bitcoin (BTC) chalked up a stellar price rally, more than doubling in value, reminiscent of the 2017 monster rally. At first, the reason for such a high move was not clearly established, but now industry analysts have come up with 3 main reasons to explain such a trend. The reasons include the non-overheated derivatives market, $14900 whale supply zone, and $16000 repeated retest.
Bitcoin Derivatives Market’s Recent Dip Reset
Bitcoin experienced an abrupt decline in price to as low as $15072 two days ago. Merely 24 hours earlier, it had dipped to $14805, leaving traders in jitters.
However, the price drop was not that bad since it had a silver lining, which was beneficial to BTC. On the one hand, Whales were now able to profit while at their positions currently located around the $15000 support level. On the other hand, long contract holders – often referred to as late buyers – were flushed out, thereby neutralizing the futures market.
Hence, ongoing BTC rally critically survived due to the Bitcoin futures contracts funding rate and the futures market reset.’ Funding’ is a mechanism Futures exchanges use to achieve balance in the cryptocurrency market.
Implying, buyers have to incentivize short-sellers when most of the market is involved in Bitcoin buying. Likewise, in the market, the behavior can happen vice versa: sellers will have to pay buyers when most of the market is involved in BTC selling.
BTC had a funding rate above 0.01% before Tuesday’s drop, indicating an overcrowded market due to heavy demand or intensive Bitcoin buying. However, BTC funding rates stabilized and the cryptocurrency futures contracts neutralized once the minor correction to the $15000 support level occurred.
Bitcoin Weakened Resistance Due to Repeated Retest of $16000
Up to yesterday, the $16000 area was regarded as Bitcoin heavy resistance level. Whales are most probably targeting this resistance level since Traders are seeing large sell orders taking place at that point.
One Bitcoin trader Edward Morra has witnessed the presence of many sell orders near $16000, saying that Bitfinex had the most orders above that level. Bitcoin has managed to push through the large sell orders occurring at $16000 due to the past week’s repeated retests that have collectively weakened the existing resistance.
Whale Support Area Held Perfectly at $14900
Throughout this week, $14900 has proved to be a whale support area. High-net-worth individuals have been buying BTC at this price, making purchases cluster at that point, thereby forming a support level.
Macro factors like Pfizer‘s vaccine development – which have caused the market to be extremely volatile – have not been able to shake Bitcoin out of its support level. Therefore, $14,900 has now become BTC’s stable support level as the market trend continues to show.
Major exchange Gemini‘s billionaire co-founder Cameron Winklevoss has come out to emphasized the importance of the $14900 to $15000 support range, saying:
“Bitcoin closed yesterday above $15,000 for the third day in a row. This is the first time in history that Bitcoin has held this price level for 72 hours. A new record.”
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