On January 2, 2021, bitcoin finally broke the $30,000 around 12:03 PM GMT. That resistance had frustrated the flagship crypto for several days since there was a major selling wall at around $30K across many exchanges. Many thought that the crypto would be rejected from that level and head into a major pullback.
But, as it has been the case throughout the current bull season, bitcoin broke past that barrier, and at the time of writing, it has set a record high of $33,090. The coin has gained over 10.8% in the last 24 hours.
Bitcoin broke past the massive sell orders around $30K which has created a massive bullish momentum after the liquidation of shorts worth around $130 million. Data shows that there is a growing influx of retail players in the market.
The flagship crypto has gone parabolic and even surpassed many expectations creating a momentum never seen before. After exploding above $20,000, many analysts thought that a pullback would come before the bullish momentum continues. However, BTC defied all odds and within two weeks it has surpassed $33,000. Within that period, the crypto has recorded gains of $2,000 to $3,000 within 24-hour periods.
What Is Causing this Rise?
This rally is predominantly spearheaded by institutional investors who are currently buying more bitcoin than the miners can supply daily. PayPal, Grayscale, and MicroStrategy have proved to the world that bitcoin might play many roles including acting as a hedging asset, a treasury asset, and a new store of value.
Also, the recent Bittrex delisting of privacy coins could be fueling this surge. That delisting raised the speculation that the regulatory agency might go on to ban the privacy coins next. Many Japanese, South Korean, and Australian exchanges started delisting privacy coins in 2020 due to the new FATF AML guidelines. Now, the regulatory body in the US seems to have begun pressurizing exchanges to do the same.
If many more crypto exchanges decide to walk down the same road, there might be mass-delisting of privacy tokens across most, if not all, reputable exchanges. Most players in the crypto scene expressed their displeasure with the move and they criticized the government for deciding to crack down on something that mainly appears under their fundamental rights which is privacy.
The Meteoric Surge
Barely 12 years old, bitcoin has enjoyed a meteoric explosion since March when it stood below $5,000. PayPal announced that it would support crypto transactions and in October 2020 JPMorgan Chase analysts compared the crypto to gold. They said:
“Bitcoin could compete more intensely with gold as an ‘alternative’ currency over the coming years given that millennials will become over time a more important component of investors’ universe.”
Several central banks have responded to the surge of cryptos and the falling global use of cash by introducing their plans to create bank-backed digital units. Unregulated by any of these central banks, bitcoin became an attractive option for investors with an appetite for its anonymous and decentralized nature.
Will Bitcoin be accepted as a form of money for use around the world? It is now a wait-and-see scenario.
Coinbase Buyers Catalyzed The Rally To $33,000
In the past 48hours, Coinbase has constantly seen a high premium compared to Binance. At some point, BTC on the exchange was $100 more expensive than on Binance. When the price exploded above $30,000, the premium went as high as $350. For example, when bitcoin was trading at $30,000 on Binance, it was priced at $30,350 on Coinbase.
Before today’s rally, CryptoQuant CEO Ki Young Ju mentioned that low Coinbase outflows posed a major risk to BTC’s rally. He explained that outflows needed to increase for bitcoin to find some new momentum, which it has already done. He commented:
“We haven’t had significant Coinbase outflows since $23k, tokens transferred is decreasing, and the fund flow ratio for all exchanges is increasing. Still possible that institutional investors would join anytime soon, but we might face a correction if it continues like this.”
As BTC price flirted with $29,500, Coinbase outflows started to spike. Ki added that these are possible over-the-counter (OTC) deals that are normally bullish for bitcoin. That exemplifies a wider trend of falling bitcoin reserves on the exchanges.
As we pump, another 34K btc got casually taken off exchange in the last few blocks pic.twitter.com/8r20JnOGaj
— //Bitcoin ack (@BTC_JackSparrow) January 2, 2021
Many high-net-worth buyers use the OTC market to transact large amounts of bitcoin. Thus, whenever the signs of OTC deals emerged, Ki believes that this was positive for bitcoin.
Barely two days after these outflows spiked, bitcoin exploded past $30,000 reaching a high of $31,400 at the time. Ki noted before bitcoin smashed $30,000:
“12,063 $BTC just flowed out from #Coinbase. It went to multiple cold wallets. Possibly OTC deals. Breaking 30k is going to be tough, but institutions don’t care. They just buy it more.”