Reports & Analysis

What was the reason for the crazy growth of bitcoin prices? Analysts respond


Bitcoin has risen to $ 34,000 in recent days, crossing $ 30,000. The main question is what was the reason for this insane growth?

Decrypt in Report Recently, he mentions 3 factors as the main reasons for this jump in the price of Bitcoin. These reasons include micro-investors, institutional investor activity, and a single whale transaction that caused a flood of algorithmic traders to enter the market.

Micro-investors

Eric Wall, chief executive officer of Arcane Assets, said in an interview:

Finally, we are witnessing the beginning of attracting small investors to Bitcoin.

Google Trends data related to the word bitcoin
Google Trends data related to the word bitcoin

Google Trends data also shows that the volume of searches for the English phrase “bitcoin” is reaching its peak. “

Since Bitcoin in the previous trend [سال ۲۰۱۷] At $ 20,000, this is the first time we’ve seen something like this.

Like many analysts, Wall points out that small investors have been involved in the recent jump in bitcoin prices on Saturdays and Sundays.

Nimrod Lehavi, CEO and founder of Simplex, has announced an increase in “demand” for micro-investors.

It should not be forgotten that investors were only partly responsible for the recent increase in the price of Bitcoin over the weekend. Lahawi believes that his company’s customers used to invest 90% of their capital in bitcoin; In recent days, however, the rate has dropped to 50 percent and investors have been drawn to Tetra and Ethereum. He continued:

Traders are now looking for the next bitcoin!

Large grain investors

Institutional and coarse-grained investors can be described as the fuel tank for Bitcoin performance in the final quarter of 2020.

With the arrival of 2021, the traces of these investors can still be seen in the market. Former White House spokesman Anthony Scaramucci is among those who have announced that they will launch a Bitcoin investment fund in 2021. Michael Saylor, CEO of MicroStrategy, has announced that he has no plans to reduce his bitcoin purchases.

Analysts believe that the increase in demand from institutional investors has facilitated the jump in the price of Bitcoin in the last two days.

Joshua Ho, founder and CEO of QCP Capital, attributes the recent jump in bitcoin prices to the “all-encompassing and steady” influx of large-scale investors. According to him, these investors are so greedy that their purchases raise prices.

In another part of his speech, Wall said that the increase in the price of bitcoin could be the result of institutional investors withdrawing their capital for long-term investment in bitcoin and reducing the number of bitcoins available to micro-investors.

Recent data from GlasNow also show that only 22% of bitcoins are available to traders for purchase. In recent months, many large companies have started buying bitcoins, and this has led to a decrease in bitcoin supply; As a result, many see the decline in supply as a key factor in the bitcoin price spike.

The question that arises is why should large market investors abandon weekend entertainment and the Christmas holidays and instead look at the Bitcoin price chart?

Pierce Crosby, internal manager of TradingView, believes that the increase in market volume is due to the efforts of large-scale investors and asset managers to balance their offices. He said about this:

Now that some have invested 1% of their assets in the digital currency market, we will see a massive imbalance between buyers and sellers in the short term.

Algorithmic traders

For the past two days, algorithmic traders and insane micro-investors have been active in the market. “It simply came to our notice then.

When Mondays come, institutional investors take control of the market. The question is when will the big sellers enter the scene?

Transfers from Quinn Base Pro wallet
Transfers from Quinn Base Pro wallet

In another part of his speech, Hu says that the sudden withdrawal of $ 1.15 billion from a Coin Base Pro wallet triggered the activity of trading robots to buy bitcoins. Trading bots usually make a purchase with any noticeable activity on the network. Of course, it should not be forgotten that such activities usually take place in bullish markets. He goes on to add:

High capital outflows are likely to indicate a large purchase that has not yet been made public.

However, Wall considers the origin of this transaction to be an exchange that is transferring its currencies from one account to another. In any case, such actions will trigger the activity of trading robots.

What is the next move?

Saying that it is normal for fluctuations to increase on the weekends, Cosby says that last weekend was no exception.

It is worth noting that the risk of reform should not be ignored. But how big will this correction be? In response to this question, Wall said:

I’m still scared. I think we have a long way to go. A double jump in the second quarter [امسال] It is possible.

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