Since yesterday, BTC/USD continued to climb and is now trading above $37,000, after growing almost 6% in the past 24 hours.
A significant number of new buyers came to the market yesterday, after Elon Musk, the CEO of Tesla, released a positive statement about bitcoin.
At the time of this writing, bitcoin was trading at $37,087 according to CoinGecko, and it is finally showing signs of having found strong support above $35,000.
Therefore, investors and traders should expect a continuation of the bull run. Additionally, BTC/USD traded within the predicted blue range without surprises. Volume continues to grow, and since early in the week, it has almost doubled.
Today, astonishing news was released, which may have contributed to the recent rally.
According to CoinDesk's Nathan DiCamillo,
"The Visa Crypto APIs pilot program will let clients ‘easily connect into the infrastructure provided by Visa's partner, Anchorage, a federally chartered digital asset bank, to allow their customers to buy and sell digital assets such as bitcoin as an investment within their existing consumer experiences,’"
the author wrote, citing a press release.
Essentially, as we have written countless times, the more behemoths there are that enter the space, the more likely it is the price will rise, since these institutions serve millions of users.
For now, we expect bitcoin to continue its uptrend and move toward $40,000. Sell orders are starting to become scarce, which means there is little room for a sudden correction in bitcoin price.
As a reminder, we are confident that BTC/USD will continue to move upward if:
- BTC/USD remains above its 20-day EMA (red), 50-day EMA (green) and 200-day EMA
(blue). - BTC/USD doesn't drop below $35,000.
- BTC/USD daily volume goes back above its 21-day Moving Average.
What Do Traders Think?
The first tweet of the day comes from Yano, the founder of Blockworks.
In his post, Yano shares the most important news of the week and what we think has had the most recent positive impact on bitcoin's price.
Yano highlights three breakthroughs that are currently assisting with the latest upward price movement:
"1) Visa launching software that helps banks offer Bitcoin", "2) PayPal's first earnings report with Bitcoin sales included", and "3) Michael Saylor pitching Bitcoin to 1,000+ corporates & investors."
In sum, as institutions like PayPal and Visa keep betting on the introduction of cryptocurrencies, namely bitcoin, to their millions of clients is a sign that the bitcoin space is maturing, and those new buyers will keep entering the market.
Do we think that will help with the ongoing bitcoin price appreciation? Absolutely. Do we fear that bitcoin will get further concentrated in the hands of large institutions? Of course not.
The reason can be seen by looking at the right piece of data.
The next post comes from Rafael Schultze-Kraft, whose Twitter profile describes him as a data scientist, on-chain analyst, and CTO at Glassnode. The post attempts to answer who is buying bitcoin, and it builds on the conclusion from the previous post.
Schultze-Kraft shares a chart of the “The estimated number of network entities by size (as of Jan 2021, log scale)” courtesy of Glassnode. Most of the network entities are “shrimp” addresses, representing talks holding less than one bitcoin.
Only about 2,200 entities represent large bitcoin holders, with over 1,000 bitcoin in a single address.
We can also add some more information regarding bitcoin distribution, released in the Glassnode blog post.
As the authors write in the article, the conclusions are twofold:
“On the large end of the spectrum, whales and humpbacks are the biggest non-exchange entities that together control around 31% of the Bitcoin supply. These are most likely institutions, funds, custodians, OTC desks, and other high net worth individuals. On the other hand, smaller entities holding up 50 BTC each (shrimp, crab, and octopus) control almost 23% of the supply. This shows that a substantial amount of bitcoins are in the hands of retail investors.”
Not only that, but according to Quantum Economics research, bitcoin is being further distributed from large-value accounts to low-value accounts. In the essay, the author concludes that:
“We noticed how the growth rate of addresses holding at least 0.1 or one BTC has been increasing at a faster pace than the addresses holding a minimum of 1,000 bitcoin. This shows how the Cantillon Effect happens in bitcoin and helps us measure it.”
Therefore, we agree with Schultze-Kraft statement that
“BTC ownership is much less concentrated than often reported – and has dispersed over time.”
To conclude, we would like to highlight that despite bitcoin getting further and further distributed from whales and humpbacks to shrimp, octopus and crab addresses, we have recently noticed a small reversal of the trend. As Schultze-Kraft writes, we think this is due to “institutional investors arriving.”
This statement answers our previous question if we think the price will keep moving higher. As long as smart money is coming to bitcoin, there is a little chance for a reversal in the price trend.
The next tweet comes from Andy Yee, a technology policy expert and the Public Policy Director for Visa in Greater China.
In his post,Yee shares the brilliant
"Bitcoin "HODL" Waves" chart, by ARKInvest. As he underlines in his tweet "More than 60% of BTC supply has been held for more than a year and an increasing amount for more than five."
Essentially, there has never been this much bitcoin being hodled. This adds extra pressure on bitcoin's price since the less bitcoin is available at exchanges, the more likely it is the price of each remaining unit to increase.
This goes in line with the Law of Supply and Demand, which according to Investopedia states:
"as price increases, people are willing to supply more and demand less and vice versa when the price falls."
Because bitcoin has a limited and fixed supply, the only mechanism that can adjust to the new demand is the price - that needs to rise to compensate for the new buyers who entered the market.
The last post of the day comes from Bitcoin Jack, a trader and market analyst.
In his post, BitcoinJack shares a fundamental logarithmic chart, showing the weekly price of bitcoin since 2012.
Practically, we can see that the price of bitcoin tends to grow as time passes by. Just like the trader wrote,
"You have one job and one job only: don't get liquidated."
We think he means that investors and traders only need to be patient and bet alongside the market. If one does not liquidate and makes the right bets, the market will reward those traders with many growth degrees.
As the chart shows, bitcoin's price rises exponentially; hence, there are plenty of opportunities to enter the market (with leverage) and make sweet gains.
What stops most traders from achieving this? Liquidations. Therefore, we always advise investors and traders to use stop-losses and never bet more than they can afford to lose.
Bitcoin Price Prediction
Today, bitcoin's price continued to move up and went above $37,000, according to CoinGecko.
Since yesterday, it has grown by almost 6%. The trend that began over the weekend seems to remain intact, providing a bullish outlook for the next few days.
At the moment, the $40,000 price range is in play for the next couple of days.
Perhaps, even today or tomorrow. Additionally, bitcoin remained within our predicted range. At the time of this writing, the digital currency was trading at $37,090.
Like we wrote in the introduction, there is little chance for a price reversal while institutional investors and wealthy individuals keep accumulating bitcoin. While whales continue to collect bitcoin, the price continues to rise. As bitcoin continues to get increasingly hodled, we think the perfect time to sell is slowly peeking in the horizon.
For the time being, let's wait for the price action to complete the current run.
To conclude our reasoning, please notice how BTC/USD keeps notching higher lows since the first crash that took price below the 20-day EMA. This signifies that the price has fully recovered from short sellers, and that bitcoin wants to move to higher price ranges.
How do we think the price will trade throughout the day? As shown in the above chart, we believe that bitcoin could find a top close to its prior record price, around $40,000, but we highly doubt BTC/USD reaches this level. It's quite likely new sellers enter the space after $40,000.
On the other hand, we don't expect the digital currency to drop much below $33,500, even if the trend suddenly reverses, due to the sheer number of buy orders placed between $30,000 and $33,000.
To finalize, the Volume Profile Visible Range (VPVR) shows a high number of buy orders between $31,000 and $37,000, and then again between $27,000 and $29,000, which means BTC/USD should not go below $30,000, even if things deteriorate significantly.
As a reminder, we think it's still possible that BTC/USD will attain a brand-new record price of around $50,000 before February comes to an end. For now, we remain bullish on both the shortand long-term price action.