Bitcoin

Why is the price of Bitcoin rising and how far could it go?

In the past few weeks, Bitcoin has been seen to appreciate significantly since the USD 12,500 resistance broke on October 21, and at the time of this writing it hit a price of more than USD 18,600. In this scenario, Binance shared an analysis of what was going on with Cointelegraph en Español.

What are the most important factors in understanding what is happening? From Binance they believe there is no doubt about that Investing in BTC in 2020 turned out to be the best investment with an appreciation of 340%with reference to the period between March and Wednesday November 18th. However, it is important to note that This kind of parabolic growth was observed back in November 2017 with the same coin.

Why is the price of Bitcoin rising and how far could it go?
Why is the price of Bitcoin rising and how far could it go?

BTC price in the weekly period from September 2017 to today (source: Binance)

The Bull Rally

Among the basic elements that allow us to understand the rise in prices, we can highlight the following:

The increase in wallets with balances over USD 10: CoinMetrics has published a graph that shows in detail the development of the number of wallets with balances above USD 10, which indicates a greater interest in “Hodlear” the currency.

Development in millions of BTC wallets with balances over USD 10 (Source CoinMetrics)

Historic highs of open interest in CME futures: The Chicago Stock Exchange is probably one of the main references in the traditional futures market in the world, and it’s been time since it entered the crypto world with the offering of Bitcoin futures that caused a stir in the community. It is clear that the increase in investment from the institutional world such as Skew points this outis another variable that must be taken into account in order to understand the rise in price of the cryptocurrency founded by Satoshi Nakamoto.

Development of open interest in CME Bitcoin futures (source: Skew)

The mass media still doesn’t report the return to all-time highs for Bitcoin: On the Google Trends website, we can see how few stories remain in the mass media about the rise of Bitcoin, a factor that could once again spark phenomena like the FOMO experienced in 2017.

Source: @Binance on Twitter

How Far Will Bitcoin Go?

From Binance’s point of view, if we look at the price of Bitcoin on their platform, we can see the next test resistance is USD 20,000, the all time high of the crypto asset so far.

If it manages to break through the resistance and reach a new high, investor Mike Novogratz speaks of USD 65,000 as the next checkpoint, while Citibank dares to speak of a high of more than USD 300,000.

Historical resistance of USD 20,000 Bitcoin (Source: Binance)

In this sense, Maximiliano Hinz, Binance’s Latam Operations Manager, noted:

“In the past few days we have heard many voices announcing a future similar to 2017, in which there was a very strong correction. What we want to highlight about this scenario compared to 2017 is that there is much less pressure from the media and that the market will be strongly validated over the long term. ”

Then he added:

“This year, several companies decided to invest part of their net worth in Bitcoin to bet on the future while supporting the technology. If we add to this the great validation of the market that we see on platforms like the Binance Card or similar, which allow us to combine traditional financing with crypto, we can understand that this market is much more natural than that of 2017. “

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