Since December 18, 2019, in less than three months, the Bitcoin price has risen 68% over the US dollar. The $ 10,000 threshold was overcome on February 9, and for most it was a sign of the start of a cryptocurrency rally. Sentiment around the current rally leaves investors divided into two camps.
For example, Joe007, one of the largest whales in the cryptocurrency world, is adamant in its belief that ascension is the result of pure manipulation. Other investors, such as Willy Woo, general partner of Adaptive Capital and Su Zhu, CEO of Three Arrows Capital, said that the fundamental and technical factors supported the rally from the start.
When the Bitcoin price was around $ 7,000, Zhu noted that the BTC / USDT price pointed to an accumulation phase that began in Asia. The explanation for the current Bitcoin price rise varies, but most agree on these three factors.
Factor 1: Bitcoin accumulation since December 2019
On December 28, Zhu said that the increased BTC / UDST price indicates that investors are accumulating BTC, and its price could attack $ 9,000 at the end of January:
“The price and its movement of the BTC / USDT pair shows clear signs of accumulation and cash flow back into risk. I wouldn’t be surprised to see Bitcoin for $ 9,000 before the end of January. ”
At that time, the price of Bitcoin was around $ 7,200 and at the end of January, as Zhu predicted, the price fired at $ 9,500.
Cryptocurrency research of Diar company suggests that most of Tether’s on-chain activities in mid-2019 were mainly in China. The volume of Tether coming from the Chinese exchanges was significantly higher than that of the Western exchanges. In the survey results we can read:
“The on-chain data shows the movements of Tether, which reach the highest value for 2019. However, most surprisingly, the volume coming from Chinese exchanges completely overshadows Western and world trading venues and represents more than half of the total transaction value of known parties.”
From this we can reasonably deduce that many investors in Asia collected cryptocurrency until the end of 2019. The gradual accumulation towards 2020 was expected to be dominated by the planned Halving Bitcoin in May, which will prepare a strong foundation for the rally to continue.
Factor 2: manipulation by whales
Since Bitcoin’s price has been around $ 9,000, Joe007 has consistently argued that the rally is manipulated by fake purchases and spoof orders. After Bitcoin reached $ 10,000, he wrote:
“I’m all for a good old BTC dish, but I want to cash out at the end. But this is not possible if the price is inflated by over-indebted players faced with low liquidity and a weak cash inflow. ”
The main argument supporting Joe007’s view is that the recent surge was triggered by other whales that created spoof orders. A Spoof Order is a fake large purchase order to encourage others to make an additional purchase to artificially increase the price. When the price rises, the order disappears, hence the term “spoof”. But what started as manipulation can become a natural development if small investors get involved and start investing for fear of losing something (FOMO).
After the BTC rose to a psychological level of $ 10,000, a cryptocurrency analyst, known by the nickname Light, said:
“Crypto exchanges are looking for liquidity. The price is too great to not be taken. We don’t have the exact number of sellers who have been waiting so long just to sell just below the top. ”
It is worth noting that in the last few days, there has been a greater influx of fiat currencies, which should support further cryptocurrency growth.
Factor 3: growth in on-chain investors activity
Willy Woo, who developed various indicators to predict the trend, said the chances of a $ 10,000 top being essentially zero. For explanation, Willy added a chart with the Bitcoin price and on-chain investor activity.
Realized Value to Transaction Value (RVT) is used as a signal to find the bottom and the peak. When the Bitcoin price reached $ 10,000 last year, the RVT ratio reached almost 0.4. By February 10, 2020, the RVT ratio was around 0.018, indicating that the Bitcoin price has probably not yet reached its peak. When the price of Bitcoin reached USD 20,000 in December 2017, the above-mentioned ratio peaked at 0.12.
Are all factors combined to grow?
The bitcoin rally from $ 6,400 to $ 10,000 probably started with manipulation by whales. This manipulation was based on the frequency and size of spoof orders. But it is true that it could attract the attention of small investors, especially Asian investors, and they began to collect Bitcoins in anticipation of a big reward thanks to Halving, which will occur in 3 months.
Although the Bitcoin price is currently around $ 10,400, technical indicators do not show an overbought market or local peaks, which may lead to somewhat persistent BTC growth.