Bitcoin (BTC) price hit a new all-time high of $ 25,945 on Binance on December 26, just a day after hitting its all-time high on Christmas Day.
BTC / USDT hourly candle chart (Binance). Source: TradingView.com
There are many reasons for Bitcoin’s rally, such as the high institutional demand for BTC. However, for the current intraday rally, an excessive short selling of Binance futures has likely been the main catalyst.
$ 25,000 BTC now above the model inventory price
Before the boom, many traders cut Bitcoin on most of the major futures exchanges. This eventually resulted in a short squeeze as short sellers sold so close to their previous all-time high. Once the record high was broken, BTC began rising rapidly as Bitcoin price entered pricing.
According to Bybt.com, more than $ 131 million worth of Bitcoin futures contracts have been liquidated in the past 24 hours. As long as there is still a surge in sellers in the derivatives market, the likelihood of short squeezes in the near future remains high.
Additionally, the current rally means BTC is now above the centerline of the popular stock-to-flow model, which is forecasting a target of $ 100,000 by December 2021.
#bitcoin price $ 25.3K over S2F model value $ 24.9K
Real-time S2F diagrams: https://t.co/K2eCFhz43I pic.twitter.com/ErGHZVDeuW
– PlanB (@ $ 100 trillion) December 26, 2020
What will happen next to Bitcoin?
Traders and technical analysts are generally positive about Bitcoin price developments in general. For example, popular dealer Philip Swift noted that the number of large sellers actually fell during the current rally.
1. The BTC price movement looks strong here. Only a few sellers on Coinbase show the short-term lack of inquiries (yellow lines) about the price.
Regarding the activity in the chain … pic.twitter.com/NyLfPiH8gi
– Philip Swift (@PositiveCrypto) December 26, 2020
“Big players,> 1000btc wallets, calmed down for the first time in this big run-up,” explained Swift. “We can see that the number of> 1000btc wallets has been decreasing rapidly over the past week. While we can see that the 1-10 BTC (bulk retail) wallets have been increasing steadily over the past few weeks.”
A quick topline analysis suggests that there are many retail buyers joining in during the Christmas break. Possibly due to: a) hearing BTC from family members / friends during vacation, new ATHs are now being made. b) plus a possible switching off of XRP / other alts.
Traders are also becoming increasingly cautious when it comes to selling Bitcoin as it has not yet reached a clear top. Until the BTC peaks are reached, the chances of a large short squeeze remain high, which will fuel the price rally even further in the short term.
In addition, Michael van de Poppe, an analyst at Cointelegraph Markets, said that Bitcoin could cross the $ 40,000 mark on the next surge. He wrote:
“Bitcoin breaks even more as it approaches my second Fibonacci point of interest at $ 25,800. The higher we go, the higher the next impulse movement will take us. If $ 25,800 is that temporary spike, then the next pulse could push BTC towards $ 40,000 +. “
Note the institutional demand
The next logical tip for Bitcoin would likely be if institutional buying of Bitcoin slows down.
16 / Here are the financial institutions and trading legends that have recognized Bitcoin is Gold 2.0 in the past 4 months:
– JP Morgan
– Deutsche Bank
– Alliance Amber
– Bill Miller
– Mass Mutual
– Dan Held (@danheld) December 26, 2020
The most practical way to measure institutional sentiment is to evaluate the volume of the CME Bitcoin futures market and BTC inflows in grayscale.
Until the two institutional investment vehicles see a noticeable decline in demand and trading volume, the chances of a profound Bitcoin correction remain slim.