Sentiments play a large role in driving the price of any asset and this could be the reason why Bitcoin is leading itself to a pre-bull run. After the covid-19 crash, Bitcoin is redeeming itself and registering high growths in its price movements. The Bitcoin Price (BTC) price took an upward swing and rose from $7,700 to $9,500 in one night. The increase of 23% was seen in less than 24 hours. Analysts from the cryptocurrency industry have attributed this increase to three main factors are:
- A record-breaking spot exchange volume for Bitcoin
- A major escape recorded from the historical resistance level
- A perceptible increase in the institutional demand
Spot exchanges are triggered by genuine retail demand generated and they usually come in the accumulation phase. Compared to what the past history has been like, Bitcoin’s recent price rise has mainly been taken on by spot volumes. Hence, the volume that hails from spot exchanges are not artificially generated by leverage or borrowed capital but with authentic demand and great sentiments surrounding the asset.
The Open Interest of Bitcoin futures on BitMex is the total amount of both short and long contracts that are open in the market. This was below $500 million. The increase was organic as the prospects of it remained low on futures exchange while spot platforms registered a buoyant jump.
The second reason was highlighted by Benjamin Blunts who ascertained that the Bitcoin price sped past the major historical resistance levels the moment it raced $8000. The 100 and 200-day daily moving averages, as well as the 0.618 Fibonacci retracement levels, were also exceeded concurrently. These are the critical resistance levels which when surpassed points towards a stronger upside that is awaited. Therefore the march towards $9500 was rapid.
Referring to the quarterly report of Grayscale it was highlighted that 88% of the bitcoin investments came from different institutions. The asset under management of the Grayscale Bitcoin touched $ 3 billion.
Source – Grayscale
The capital inflow has not been unchecked, but it has rather been a very gradual influx of capital in Grayscale products. The trend has been recorded since January this year which only implies that right from the first quarter of 2020, these activities are taking place.
These three reasons are considered to be the biggest reasons for the massive upturn in the bitcoin prospects.