1 month ago
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Certainly the growth of the Bitcoin price in recent days is due to the increase in demand, and therefore the buying pressure.
But a second dynamic has been added to this, which has made its price rise a lot and very quickly.
The rise of the Bitcoin price
The recent rise in the price of Bitcoin began on November 6, when it became clear that Donald Trump had won the 2024 USA presidential elections.
The price initially was around $69,000, and within just 24 hours it first moved back above $70,000, and then recorded new all-time highs at around $75,000.
That rise was certainly triggered by Trump’s victory, but this was not the only reason.
Subsequently, it practically did nothing but continue to rise, always with oscillations up and down, marking another four historical highs in as many days.
The latest all-time high was recorded just last night, above the 81,800$ mark.
Compared to the $69,000 on November 5th, the growth in less than six days was 17%, which is not an astonishing percentage for Bitcoin but still very significant, especially because it occurred above the previous all-time highs of $73,800 in March.
Bitcoin liquidity on exchanges at historic lows
As mentioned before, Trump’s victory has increased the demand for Bitcoin (BTC), and therefore the buying pressure.
However, this dynamic alone at this specific historical moment would not have had the strength by itself to increase the price of BTC so much, and in such a short time, setting record after record for almost a week now.
There has indeed been another dynamic no less important.
According to the data from CryptoQuant, from October 20 to November 5, the BTC held in reserve by the exchanges remained substantially unchanged.
Instead, starting from November 6, they began to decline, and the decline lasted for three days. From November 9 to today, the decline has stopped, probably also due to the weekend.
The fact is that the Bitcoins on the exchanges are the only ones that can be sold on the exchanges themselves, so the fewer there are, the less supply of BTC there is on the exchanges.
Furthermore, since those who deposit BTC on exchanges very often do so to sell them, a decrease in BTC on exchanges suggests even more a decrease in selling pressure.
And so, in addition to the increase in buying pressure, there was also a reduction in selling pressure, and the two combined phenomena pushed the price of Bitcoin upwards in a consistent and fast manner.
Now it will be necessary to understand if this trend will continue or if it will stop or reverse.
The decline in selling pressure
The fact is that, despite ups and downs, the selling pressure on the exchanges has been almost constantly decreasing since the second half of February.
In fact, even the historical high of March was driven by the decrease in selling pressure, together with the rise in buying pressure.
The almost constant reduction of BTC in reserve on crypto exchanges from February until today could be largely due to ETF purchases, albeit indirectly.
ETFs do not purchase directly from the exchanges, but from OTC desks that may, however, be forced in turn to go and get BTC from the exchanges if they do not have enough. Furthermore, the main Bitcoin ETF, IBIT by BlackRock, uses Coinbase’s OTC, which is the largest US crypto exchange.
To tell the truth, the increase in purchases by ETFs already started in January, when they landed on the USA stock exchanges, but the first real surge began only in February, just before the BTC in reserve on the exchanges started to decrease.
There have been three other periods in 2024 during which ETFs have purchased significant quantities of Bitcoin, namely June, July, and from September until today.
In June, there was one of the largest reductions of 2024 of BTC on crypto exchanges, and there was a second one at the end of July. The third one started right in September.
The arrival of FOMO
All this could pave the way for the arrival of FOMO.
The curious thing is that, despite a week of record after record, the FOMO for now still doesn’t seem to be there.
First of all, because the price increase is also due to the reduction of selling pressure, and not only to the increase of buying pressure.
But above all because the interest in Bitcoin grew significantly only on the day of Trump’s victory, while in the following days it strangely waned again.
Yesterday, however, it went up a bit again, so much so that in theory now there would be the conditions for the arrival of true FOMO.
The key at this moment would seem to be the break of the 82,000$ level.
Although it may seem strange that the demand for Bitcoin could skyrocket after its purchase price has risen so much, retail speculators generally behave in this way.
The key level of $82,000
First of all, it must be said that surpassing $82,000 does not seem easy at all.
Last night there was a first attempt to approach this threshold, but it failed.
Furthermore, for two days the selling pressure has not decreased anymore, even though with the end of the weekend it might start to decrease again.
The fact is that the daily RSI index of the relative strength of Bitcoin’s price has been in the overbought zone for six days now, and although in theory it could remain there for a while longer, with each passing day the time shortens for its descent back below the 70-point mark.
So, on one hand, it might be challenging for Bitcoin to surpass $82,000 and register new all-time highs above that threshold, but on the other hand, if it happens, it could trigger FOMO and push the price well beyond that threshold.
However, it is not at all certain that this can happen immediately, and it may also be necessary to wait until December for a similar dynamic to be triggered. In the meantime, there might be a correction.
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