2021 started above $28,500 and Bitcoin has already been up over 20%. Meanwhile, the traditional markets have yet to open.
On the day of its 12th birthday, January 3rd, Bitcoin first broke above $33k, went down to $30,500 only to smash through $34k, and missed $35k by a few hundred dollars.
On Bitcoin’s Birthday, these gains helped the pseudonymous creator Satoshi Nakamoto become the 40th richest person in the world, with $34 billion.
Bitcoin is now marching towards $50k.
Demand > Supply
But why exactly does the Bitcoin price keep on going up and up and up?
The most simple answer is there are more buyers than sellers in the market currently.
As we have been seeing throughout 2020, the cryptocurrency exchange reserves have been declining. Bitcoin holders have been increasingly moving their BTC off the exchanges to keep them safe in hardware wallets as they don’t have any interest in selling them because they believe the price will go higher.
“BTC is leaving exchange wallets which imply less supply for buyers with insatiable demand. The price goes up,” states Joe McCann, a crypto enthusiast working at Microsoft.
These uptrends came despite the flagship cryptocurrency being in overbought territory, as per technical indicators. The underlying buying on spot exchanges and the long term buying for investment are strong with USDC flows to support this buying off the charts.
This buying can particularly be seen on institution-focused Coinbase Pro, whose outflows indicate institutions’ FOMO buying. Over 35k BTC worth more than $1 billion were moved out of the exchange early Saturday, just a day after 12,063 coins also left, as per data source CryptoQuant.
Retail isn’t much far behind.
According to economist and trader Alex Kruger, “Bitcoin is being driven by spot demand,” as can be seen in the flat funding and Bitmex perpetual – Coinbase spot basis being negative.
The digital asset is now also approaching the midpoint of its logarithmic adoption curve channel, and “if ever there were a moment to blast straight through magic resistance, it’s right now,” said analyst Cole Garner. Given BTC’s current momentum, it can blast through it as well.
“People started getting a little ridiculous today, as can happen with large price action. I’m very bullish but we’re not going to magically teleport to $100k in one day,” tweeted trader Resolute right before the call for $100k next week.
While many believe $20k isn’t coming back now, another trader Jonny Moe notes how the BTC weekly RSI has hit 93.2, higher than 90.2 seen at Dec. 2017 top. BTC weekly RSI higher than the current one was in November 2013 at 96.3.
With the current market looking like 2013 rather than 2017, the market sees potential for a big drop before continuing higher. In the meantime, today BTC price casually dropped 18% to $28,540 and is already near $31k.
The market has been calling for tops ever since Bitcoin broke the $20k, last year ATH. Although the market did see some small drops here and there, they were sharply reversed.
In the current market, it is anyone’s guess if a big correction will even be coming the market’s way.