Bitcoin’s price broke past $49,000 to hit a new all-time high across major exchanges.
Bitcoin’s price (BTC) hit a new peak above $49,000 on Valentine’s Day on Feb. 14, rising to as high as $49,344 on Coinbase.
There are three key reasons Bitcoin emerged as a new all-time high, called high stablecoin inflow, a clean break in the $38,000 resistance area, and a prolonged consolidation period.
High stablecoin inflows were key
Over the past few days, amid the stabilisation of Bitcoin below $38,000, on-chain analysts have identified a steady rise in stablecoin inflows.
According to data from CryptoQuant, a data analytics platform, the Stablecoin Supply Ratio (SSR) increased significantly from the mid-$30,000 area.
The SSR measure displays the market cap ratio of Bitcoin to the aggregated market cap of stablecoins.
If the price of Bitcoin increases in accordance with the SSR ratio, it means that it is likely to be guided by sidelined capital re-entry into the market.
This pattern is highly positive since it demonstrates that the rally was not merely guided by an over-leveraged futures market. In reality, it was the real demand from the spot market that led to the uptrend.
On top of the high stablecoin ratio, analysts also pointed to the decline in mining sales pressure.
After the Bitcoin halving in May 2020, miners make half the $BTC they used to make.
Today, miners earned $4m in 1 hour, making it the biggest hourly revenue in history. h/t @glassnode
That’s how fast BTC has risen in the span of 9 months.
— Joseph Young (@iamjosephyoung) February 12, 2021
The combination of the lower selling pressure from miners and the increasing stablecoin inflows into exchanges catalyzed the ongoing Bitcoin rally.
$38,000 resistance cleanly breaks
Bitcoin has been consolidated under the $38,000 resistance area for a prolonged period of time. This posed a challenge to Bitcoin’s short-term bull cycle.
When the price of Bitcoin hovers under the main area of resistance for a long time, it raises the risk that BTC will fall to a lower support area to tap lower liquidity.
This is partly the reason why Bitcoin routinely fell to around $44,000 before its eventual $38,000 raise rally.
Long consolidation was beneficial for BTC price breakout
A relatively long restructuring phase usually leads to two scenarios: a serious breakup or a significant break-up.
If Bitcoin rallyes without strong fundamentals to sustain the rally, there is a greater risk that consolidation will lead to a deep correction.
But, in the case of Bitcoin over the last three days, its consolidation period under $38,000 was backed by increasing stablecoin inflows, a strong Coinbase premium, and a generally high trading volume across both spot and futures markets.
Thus, even though the futures market remains highly leveraged and overcrowded, despite the possibility of a long tightening, BTC has been able to break through the region of resistance.
There are many factors that make the rally viable in the near future. Second, stablecoin inflows do not slow down.
Second, today’s rally has reversed the structure of the bearish market to a bullish short-term pattern over lower timeframes.
As long as Bitcoin stays above the $38,000 level that has become a support area, its near-term bullish market structure will remain unchanged.
238 Interactions, 2 today