For the first time since 2017, the price of Bitcoin rose above $19,000, and multiple indicators suggest that momentum may continue.
The price of Bitcoin (BTC) reached $19,000 on November 24 for the first time since the historic December 2017 increase. Three key reasons are behind the strong momentum in the cryptomone currency.
The main factors driving the continued rise in BTC are the build-up of whales, declining supply from exchanges and explosive volume trends.
Whales continue to accumulate Bitcoin
Throughout November, Cointelegraph reported that whale aggregations were constantly forming as the price of Bitcoin rose.
These clusters arise when Bitcoin whales buy BTC at a certain price and do not move it. Analysts have interpreted this as a sign that the whales are accumulating and that they have no intention of selling in the short term.
The difference between Bitcoin’s current rise and previous price cycles is that the recent upward trend has proved more sustainable. In fact, every whale cluster shows that every major support level that BTC claimed was accompanied by whale accumulation.
On November 18, when Bitcoin fell to $17,200, Whalemap analysts said the new whale support was at $16,411. They said:
They said: „The bubbles indicate the prices at which the whales have bought the BTC they currently have. The bubbles also visualise the support levels. Last time it bounced off $15,762 and had a 15% price increase. Will the new bubble at $16,411 hold this time as well?“
Since then, Bitcoin has recorded several more drops below $18,000 but has since recovered above $18,800, maintaining its strong momentum.
In addition, data from Santiment, a chain marketing analysis platform, shows a similar trend. Santiment researchers found that BTC whale numbers increased significantly in recent months. They explained:
„The number of #Bitcoin whales with at least 10,000 currencies (currently $185 million or more) has shot up to 114 in recent days as prices have risen above $18,000. In addition, the number of holders with at least $1,000 BTC ($18.5 million) has reached an ATH of 2,449!
Bitcoin supply on the exchanges is running out
A consistent trend throughout the 2020 upward cycle was the continued decline in Bitcoin reserves from the exchanges.
Investors and whales deposit BTCs on exchanges when they want to sell BTCs. Therefore, the recent fall in exchange reserves means that there are fewer sellers in the market.
A trader with the pseudonym „General Byzantine“ said that every time the spot exchanges expand their BTC reserves, they are depleted. He said:
„Every time the cash exchanges add $BTC to their reserves they run out almost immediately. Don’t you understand? There is literally not enough supply.“
The volume is increasing
The volume of both institutional and cash exchanges has been increasing rapidly since September. Open interest in Bitcoin futures and options on CME’s exceeded $1 billion in November and Binance’s BTC/USDT pair has consistently delivered over $1.5 billion in daily volume.
Several data points also show that the spot market has been leading the rise, 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 the majority of the volume during an upward trend in Bitcoin, there is a large risk of cascading liquidations. This time, the spot market has led the way, making the rally more sustainable.