Bitcoin Panic Buying Drives Price To New High

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Bitcoin Panic Buying Drives Price To New High

Bitcoin Panic Buying, It’s Here

Bitcoin prices smashed through the $6,000 resistance level over the last week and have surged to new highs. The move is taking the token ballistic and driven in large part by panic buying. Panic buying, the fear prices will keep moving higher and you will miss out. It’s a real thing and folks, it’s going to drive BTC all the way to $20,000. It may take some time, it will likely not all happen at once, but with each new wave the market will re-inflate to it’s previous levels.

The daily charts look quite strong. The BTC price is moving up steadily with bullish indicators and room to run higher. While it is never a good thing to assume prices will just keep running up we have some assurance this price will move up to the next resistance zone. That zone is near $6,500 and may provide a pull back or consolidation that can be used as a new entry point for short-term trading. The only caveat is that MACD momentum is diverging from the new highs and stochastic is overbought, additional indication a correction may be brewing.

The weekly charts look really nice, really nice indeed. The BTC price bottomed over the past few months and is now I a full reversal. The reversal is still in its early phases but the signs are strong. The candle pattern over the past month to six weeks is a nice continuation confirmation at a support level, price is breaking resistance at a key pivot point, and MACD momentum is slowing building. Not only is momentum bullish and growing, stochastic is high in the range but still has some room to run higher. Based on this chart it looks like $7,500 is a more likely resistance target than $6,500.

Longer-term, the $7,500 level could be incredibly important. At that level lingering resistance from the 2020 sell-off will either be there or not. Once that hurdle is cleared the next logical targets are $10,000, $12,500, and $15,000. Once we start talking about $2,500 dollar swings the panic buying will intensify, traders will see dollar signs dancing in their heads, and a push to $20,000 will soon follow. When $20,000 is broken I think $30,000 and $40,000 will be close behind.

Bitcoin Price prediction: can hit 75000$ in 2021

Bitcoin price prediction: “Bitcoin can hit 75000$ in 2021”.

Let’s Discuss how and when Bitcoin can hit 75000$ in the near future.

Fundamentals

Bitcoin Halving

Bitcoin Halving is a technological protocol upgrade that reduces the bitcoin mining reward to half in every 4 years to control the price inflation. Last Halving event took place in July 2020 which reduced the mining rewards from 25 BTC to 12.5 BTC. The next halving event will take place on 2 May 2020 – 92 days away from today. Bitcoin block rewards will be reduced to 6.25 BTC from 12.5 BTC after halving. Bitcoin recorded 4000% Price gain post last halving in 2020. We can expect similar price action this time around as well.

Bitcoin Soft-forks

Bitcoin will implement three new privacy features through soft-forks later this year. These three new privacy-based implementations are –

According to recent news, Taproot softfork which is the biggest bitcoin technological update since SegWit has been formally proposed by Bitcoin core Team.

Bitcoin Soft-Forks will surely help the price to rise in value in the near future.

Regulated Bitcoin Trading

Bakkt launched regulated bitcoin trading instruments last year with industry-first physical contract delivery. Bakkt has been witnessing record-breaking trading volume since its launch in September last year. Bakkt also launched bitcoin options trading this month. Bakkt recorded a massive surge of trading volume by 1600% this month. Bakkt will act as an important catalyst for the next bitcoin bull run. They recently announced in World economic forum event that- they are set to launch a consumer-based application to drive mainstream bitcoin adoption this year.

Lighting Network

The lighting network is an important pillar of the Bitcoin ecosystem which will pave down the way to mainstream adoption in the near future. Lighting network – a solution developed by Blockstream offers a layer-2 solution that it can handle 1M Transactions per second with close to zero transaction fees.

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Bitcoin ETF

Last but not least, Bitcoin ETF is one of the major catalysts which can drive Bitcoin price to new highs in the near future. SEC has rejected multiple Bitcoin ETF applications, submitted by different companies in the last four years. Bitcoin has recently got a regulated trading environment by Bakkt after CME Group Bitcoin futures launch in 2020, also there has been a massive surge in institutional investment interest in last two years – All this indicates Bitcoin industry is building a solid case for an upcoming Bitcoin ETF approval.

Technicals

We are using 2020 Monthly chart here (before and after the last halving) as a study point to predict the future price action for bitcoin in 2020 and 2021.

Bitcoin had a first major bull run in 2020 and made a cycle high at 1160$ in Nov’ 2020, Price later corrected by 87% in 2020 and Bitcoin found cycle low at 150$ in January’2020 – 16 months before last bitcoin halving which took place in July’ 2020.

Bitcoin took 25 Months from its cycle low to break ALL-TIME HIGH in February 2020. Price rose from 150$ to 1200$ during that period, recorded 670% growth.

After breaking through ALL-TIME HIGH in 2020, Bitcoin took Six months to break above 4.236 FIB LEVEL which was at 4432$ at that time. Bitcoin made 300% growth in those six months.

Bitcoin price prediction – Now let’s have a look at the 2020 Market.

Bitcoin ended its first major bull run in Dec’17 after price made a new all-time high at 20000$. Bitcoin witnessed a major bearish cycle next year in 2020, and the price corrected by 84% in value. Bitcoin made a cycle low at 3200$ in December 2020 – 16 months before the next halving.

Bitcoin price found a bottom/cycle low – 16 months before both halving – 2020 & 2020.

In 2020 First Major Market cycle Low was at 150$, and in 2020 Last market low was at 3200$.

During the last market cycle, Bitcoin took 25 Months to break the previous all-time high at 1160$.

As we have derived that Bitcoin had found cycle low before 16 months before both halving events. Based on data points, we can predict that Bitcoin is going to follow the previous market cycle. which concludes that Bitcoin should break above 20000$ in 25 months from last cycle low which was found in Dec’2020.

According to the chart, Bitcoin can make a new all-time high in January 2021.

Once Bitcoin will break above 20000$, Fresh Retail/Institutional funds will start entering into the market. That will be the start of a major bull trend – which will take the bitcoin price to a new high.

Bitcoin Price prediction-

Bitcoin took 6 months to break above 4.236 FIB Level in 2020. If bitcoin follows the history then bitcoin should reach above 75000$ by July next year.

Check out how bitcoin is looking on a daily timeframe.

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Why is Bitcoin Going Down / Up? What Determines Price?

By: Ofir Beigel | Last updated: 11/14/19

Bitcoin’s price is probably the most commonly searched aspect of the digital currency. This post explains how the price is determined and what makes it go up or down.

Why is Bitcoin Going Down / Up Summary

Bitcoin’s price is defined by the last trade conducted on a specific exchange. Price goes up when buying pressure increases, and goes down when selling pressure increases. There are several major factors that can cause the price to go up or down such as:

  • Media hype / FUD
  • Lost of trust in fiat currencies
  • Institutional adoption
  • Supply shortage
  • Dumping of coins on the market

That’s what affects Bitcoin’s price in a nutshell. For a more detailed explanation keep on reading, here’s what I’ll cover:

1. What is Bitcoin’s Price?

When talking about Bitcoin’s price, people are usually referring to either the USD price on a leading exchange (such as Bitfinex, Binance, or Bitstamp) or a composite price made from the average of multiple exchanges’ prices (e.g. CoinGecko).

When people talk about the price on a certain exchange, they mean the price of the last transaction made on that specific exchange.

So for example, if the price of Bitcoin on Bitstamp is $10,000, this means that the last trade made on Bitstamp was closed at $10,000. Once a new trade is conducted, the price will be updated accordingly.

As Bitcoin is a decentralized asset that trades on many exchanges and between countless individuals around the world, there is, in fact, no singular Bitcoin price.

Each exchange has its own price for Bitcoin, although these prices are usually quite similar. This opens the door to arbitrage opportunities for experienced traders with enough capital (explained below).

Price Index

As there’s no official Bitcoin price, certain sites and companies make a composite index price available. This price is calculated by weighting the prices of various leading currencies by volume and combining them as an average.

For example, the Coindesk Bitcoin price index represents an average of bitcoin prices across leading global exchanges that meet certain criteria.

These indexes can be useful pricing mechanisms because they smooth out the effect of any unusual trading activity on a single exchange.

For example, say a large trader decides to sell 25,000 BTC on Bitfinex. The price will be greatly suppressed on that exchange and take some time to recover back to the international average price. An index price will show less of this localized disturbance over its duration.

2. What Determines Bitcoin’s Price?

Price discovery describes the process by which buyers and sellers meet on a crypto exchange to reach agreement on the price at which they’ll trade.

Buyers want to pay as little as possible for their Bitcoin. Sellers want to sell Bitcoin for as much as possible. Both must compromise upon a certain price before any trading can occur.

As I’ve mentioned before, the current price of Bitcoin, on any exchange, is simply the most recent price a buyer and seller have agreed to.

Let’s take a closer look at how buyers and sellers on a crypto exchange reach an agreement.

The Order Book

The trading interface on any standard crypto exchange features what’s known as the “order book.” It’s not a real book of course—rather the display page for market information that relates to the execution of buy and sell orders.

On the buy side of the book are listed all the standing offers to buy Bitcoin at a certain price—also known as “bids.” On the sell side are all the offers to sell Bitcoin at a certain price—also known as “asks.”

Recent trades are often displayed too, in a list and/or chart format.

Here’s an example of BitStamp’s real-time order book, as displayed via the interface of BitcoinWisdom.com:

Asks are listed at the top right; showing the price the sellers want for their coin and the number of coins they are willing to sell.

Additional asks are present in Bitstamp’s order book, but only a dozen or so asks that are closest to the last price are visible here. Below are the closest bids, showing the price and number of coins the buyers want.

At the bottom is the trade history, which shows how many coins were traded and at what price. The most recent trade will be the one that set the last price.

This last price reflects the current valuation of Bitcoin on the exchange—in other words, the current Bitcoin price. It will change only as further trading occurs.

Makers and Takers

Bitcoin’s price movements are often explained away as more buyers than sellers, or vice versa. In practice, this isn’t really true since it always takes two parties to trade (if someone bought Bitcoin, someone else sold it).

What really drives the price up or down is the side that’s more aggressive in “crossing the spread.” The spread is simply the difference between the best bid and the best ask price.

In our Bitstamp example, the best bid (i.e. buying price) is $9,350, and the best ask (i.e. selling price) is $9,400, so the spread is $50.

Whichever side is more motivated to trade will pay the $50 spread cost in order to execute the trade immediately. This side is known as “the taker,” as it’s taking the offer listed in the order book by “the maker” (the person who created the trade).

Let’s say that multiple buyers, convinced that price will hit $10,000 by Friday, are acting as takers.

Buyers believe they’ll profit by buying below $10,000. This makes them more likely to pay the spread to buy up all the coins on offer at $9,400—they expect to make $600 minus the $50 spread.

Once buyers have absorbed all the coins offered at $9,400, the next best ask then becomes coins offered at $9,450—and after that, coins offered at $9,500, and so on, up the ask list.

If buying is aggressive, sellers soon realize it and start raising the prices of their asks. This continues until buying pressure is exhausted, at which point the process will reverse. Over time, these impulses drive the price up or down.

This process happens across all Bitcoin exchanges. What keeps prices more or less synchronized across exchanges is the process of Bitcoin arbitrage, the trading strategy that takes advantage of the price differences between trading venues.

For example, if Bitcoin is cheap on Bitstamp but expensive on Coinbase, then traders will buy on Bitstamp and sell on Coinbase. The effects of arbitrage are what keep prices aligned across exchanges.

Leading Exchanges

Finally, it’s worth noting the effect of market-leading exchanges. Those with the highest volumes (i.e. the highest number of coins traded) tend to be considered as having the more “official” price.

For example, if Bitcoin’s price spikes on a major exchange such as Bitfinex, Binance, or Bitstamp and especially across several major exchanges at once, then it will almost certainly lead all other global exchanges to have higher prices too.

The reason for this leading exchange(s) phenomenon is simply that most traders pay close attention to major exchange prices.

Traders have the expectation that prices on major exchanges will filter through to minor exchanges due to the effect of arbitrage effects and the belief that other traders will act accordingly.

This leading exchange effect occurs even across exchanges that use different currencies.

For example, if Bitcoin that’s being traded in a high-volume country such as Japan, where it’s priced in JPY, starts dipping below the average international price, that’s likely to act as a drag on prices in USD, EUR, and other markets too.

3. Why is Bitcoin Going Down?

Now that you understand what Bitcoin’s price is and how it’s determined, let’s go over some events that can make Bitcoin’s price plummet.

Price Near All Time High

Often when Bitcoin’s price reaches a point near a recent all time high, price resistance is met and the price fails to cross the previous high.

This is attributed to the fact that many traders place sell orders near historical all time highs. Therefore, when the price reaches these points, a selling pressure is felt that brings the price down.

Media FUD

FUD stands for Fear, Uncertainty, and Doubt. Media FUD happens from time to time when Bitcoin receives very negative press. Here are some examples of how Bitcoin has been declared dead over 350 times throughout the years.

This type of media FUD can cause mass panic and increase the selling pressure as people lose faith in Bitcoin.

Keep in mind that more often than not the media is looking to make headlines and generate interest rather than conduct extensive detailed research. So don’t rush to sell the moment you hear Bitcoin is dead yet again.

Dumping Coins on the Market

As a general rule, whenever a large amount of Bitcoins is being sold on the market, it will drag Bitcoin’s price down since the sell pressure increases.

For example, in certain cases, the FBI or different authorities seize substantial amounts of Bitcoin from illegal operations. When this happens, they usually auction off these Bitcoins to the public.

Since authorities aren’t geared towards maximizing profit and a usually large amount of Bitcoin are being auctioned, they are normally sold below the market price.

This, in turn, causes Bitcoin’s price to drop, as the auction winner usually sells some of his newly acquired coins on exchanges as well.

4. Why is Bitcoin Going Up?

There are also certain events that increase buy pressure and make Bitcoin’s price go up. Let’s go over some examples.

Crossing an ATH

If Bitcoin’s price crosses a certain all time high, in many cases this generates positive buying momentum which increases the price even more.

Having said that, when extreme buying momentum occurs it’s highly likely a sharp drop in price will soon follow (also known as a correction). If you’re taking advantage of a buying momentum, keep this in mind and consider taking some money off the table before this happens.

Media Coverage / Hype

The same way media FUD can generate panic and selling pressure, media hype can generate increased buying pressure.

This was evident in 2020’s great Bitcoin rally when the price neared $20,000. Every other day Bitcoin was covered in the news, generating increased adoption, interest and mainly speculation from the masses.

The saying “buy the rumor, sell the news” implies that whenever the media coverage kicks in, it’s time to be wary about the price since a correction may soon come. So while initially, media coverage drives up the price, it can also cause it to crash if it rallies too fast.

Lost of Trust in Fiat

One of the major drivers behind Bitcoin’s price surge throughout the years was lost of trust in traditional fiat currencies (USD, EUR, GBP, etc.).

When people lose trust in their own currency (e.g. inflation) or banking system they look for an alternative to store value that isn’t controlled by any government or bank. Usually, Bitcoin, among other assets such as gold, is a popular solution.

Adoption

When a major retailer or financial institution starts accepting Bitcoin, it usually signals the market that Bitcoin is becoming more mainstream. This may cause the price to rise due to speculation of future mass adoption.

Another major price driver is said to be the approval of Bitcoin financial instruments such as Bitcoin ETFs and Bitcoin futures. These financial instruments allow big institutions such as banks, hedge funds, etc. to invest in Bitcoin without actually buying the currency.

Some believe that if major market players consider Bitcoin a legitimate investment, it’s only a matter of time until the general public starts investing in it as well, increasing the buying pressure.

Supply Shortage

Another main driver behind increased buying pressure is shortage in supply. Bitcoin’s supply is capped at 21 million. Until today, over 85% of this amount has already been mined.

Today, every 10 minutes on average, another 12.5 Bitcoins come into existence, however, this amount is halved every 4 years or so.

Some believe that Bitcoin’s halving event will drive up Bitcoin’s price as a shortage in supply of new Bitcoins will occur. The next halving event is scheduled for June 2020.

5. Frequently Asked Questions

Why Does Bitcoin’s Price Fluctuate?

Bitcoin’s price is extremely volatile. It’s not uncommon to see price movements of 5% or even 10% in a single day. The reason for these fluctuations is that Bitcoin’s market cap is still relatively small.

The market cap = Number of Bitcoins in circulation * Price per Bitcoin.

Usually, the smaller market cap an asset has, the more volatile it will be. Imagine throwing a rock into a small pond. Now take the same rock and throw it into the ocean. The rock will have much more effect on the pond than on the ocean.

In the same manner Bitcoin (the small pond for now) is more volatile (i.e. affected) by everyday buy / sell orders (the rock). When Bitcoin’s price increases, so will the market cap and the price movement will gradually decrease.

6. Conclusion

Bitcoin’s price will probably continue to fluctuate until mainstream adoption will arrive. For now, big buy or sell orders by Bitcoin whales disrupt the market as the market cap isn’t big enough to withstand them.

The current unstable worldwide financial system may prove to be the final push Bitcoin needs to skyrocket, however, it’s anybody’s guess if indeed that scenario will play out.

What are your thoughts about Bitcoin’s price? Will it skyrocket, plummet or just stay the same? Let me know your thoughts in the comment section below.

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