ZB Academy：3 reasons why Bitcoin rose more than 60% in just two months
In the past two months, the price of Bitcoin has risen sharply, reaching a 33-month high, close to $16,000. This upward trend began in early September, when the price of Bitcoin was below $10,000, and then the price of Bitcoin accelerated in the second half of October. Last week, Bitcoin reached a high of $15,971, which is the highest level since January 2018. According to official data from ZB.com, the price of Bitcoin has risen by approximately 63% in eight weeks. Between 2018 and 2019, Bitcoin often fell below $10,000. It is not difficult to find that the price of Bitcoin tried to recover from the crash after it surged to a high near $20,000 in late 2017. So, what is behind the rapid growth in recent weeks?
Here are the three main factors driving the bull market:
1. Institutions increase their holdings
Matthew Dibb, co-founder and chief operating officer of Singapore company Stack funds, believes that in the past eight weeks, we have seen many well-known listed companies and hedge funds enter the cryptocurrency market and deploy a large amount of funds. For example, on September 15, the listed business intelligence company MicroStrategy announced the acquisition of approximately $250 million worth of bitcoin. Three weeks later, the mobile payment company Square also disclosed its investment in the bitcoin market. In October, the leverage ratio in the derivatives market also tended to be bullish, with institutions holding long positions in Bitcoin futures listed on the Chicago Mercantile Exchange reaching a record level. The increase in institutional participation may put upward pressure on prices. In addition, it has boosted market sentiment and may encourage more investors to join the market. Until the end of October, according to the official data of ZB.com, the spot participation rate of Bitcoin has also increased and reached a record high.
Since the outbreak of COVID-19, the additional fiscal stimulus measures in the United States and the Fed’s ongoing plan to increase inflationary purchases have raised concerns about the U.S. dollar and prompted institutions and retailers to invest at least some money in Bitcoin. This series of actions has made Bitcoin a tool for hedging the risks of traditional financial investment, and it has become the same existence as gold in the eyes of some people.
2. Supply tightening
Large-scale spot buyers, mainly institutional buyers, have caused a shortage of liquidity in Bitcoin and caused their prices to rise. After the influx of Grayscale’s GBTC trust, MicroStrategy, and a large number of other spot buyers, the supply of Bitcoin began to become more scarce. In addition, due to the frequent occurrence of security accidents and risk control accidents in various exchanges, there are many retail investors who transfer their coins from exchanges to their own wallets, which intensifies the exhaustion of sellers’ liquidity. According to data from Glassnode, the total number of bitcoins held by cryptocurrency exchanges has fallen to 2,404,788 bitcoins in the past two months, a year-on-year decrease of 9%. The decline in the exchange balance indicates strong holding sentiment in the market.
3. A major breakthrough in price
In the third week of October, after Bitcoin broke through $12,500, the market’s bullish sentiment towards Bitcoin further strengthened. At the time, many analysts believed that $12,500 was the best price for bulls. This was mainly due to Bitcoin’s attempt to break through the $12,500 resistance level in August, but it failed. But in fact, Bitcoin eventually broke through the $12,500 price level and brought stronger chart-driven buying pressure. Bitcoin broke through this key barrier in the third week of October and kept bidding for the next two weeks. And now, Bitcoin price has already turned the $12,500 resistance level into a support level.
As of press time, according to ZB.com’s official market data, the transaction price of Bitcoin is close to $15,390, which has risen by 113% so far this year.
About ZB Group
ZB Group was founded in 2012 with the goal of providing leadership to the blockchain development space and today manages a network that includes digital assets exchanges, wallets, capital ventures, research institutes, and media. The Group’s flagship platform is ZB.com, the industry leading digital asset exchange. The platform launched in early 2013 and boasts one of the world’s largest trading communities.
ZB Group also includes ZBG the innovative crypto trading platform, and BW.com, the world’s first mining-pool based exchange. Other holdings include wallet leader BitBank, as well as exchange brands ZBM, ZBX and Korea’s Bithi.
Industry intelligence and standards are headed by the recently launched ZB Nexus who embody the core values of ZB Group and open-source their reports and analysis for the public.
Learn more about ZB Group by visiting www.zb.com.