Bitcoin Continues Its Rally Supported by Institutional Who Are Gaining the Upper Hand Over Whales
By: Sylvain Saurel
Tags: Bitcoin, Investing, Cryptocurrency, Btc, Cryptocurrency Investment

Bitcoin Continues Its Rally Supported by Institutional Who Are Gaining the Upper Hand Over Whales

Illustration by Sylvain Saurel

Since Bitcoin price has crossed the $20K mark, the bull rally we have been experiencing since the beginning of October 2020 has not faltered. On the contrary, it has even intensified. The $20K was a real psychological barrier.

Once this psychological barrier was overcome, Bitcoin entered uncharted territory. Bitcoin is currently in price discovery mode.

Yesterday, December 19, 2020, Bitcoin crossed a new barrier: the $24K. A new All-Time High (ATH) was reached at $24.2K. Seeing Bitcoin continue to rise suggests that $25K can be reached by the end of 2020.

At the very beginning of December 2020, when the Bitcoin price was in roller-coaster mode, this was far from obvious.

For several days now, many have been thinking that Bitcoin price is going to experience a major correction in its price, as is usually the case after such a bullish rally. It must be said that the Bitcoin price has been rising steadily since the end of September 2020.

In a few weeks, the Bitcoin price has risen from $10K to $24K, an increase of +140%.

Since reaching a new ATH on December 1, 2020, we have witnessed several times attempts by Whales to trigger this strong correction that many are waiting for. Just yesterday, when Bitcoin price surpassed $24K, several sell walls were in its path.

In two hours, nearly $138 million of shorts were liquidated. Earlier in the week, $1 billion of shorts were liquidated in two days. The Whales clearly intended to trigger this big correction, but the Bitcoin price has been going through the roof so far.

The reason is to be found in institutional investors.

Institutional has been buying the slightest drop in the Bitcoin price for several weeks now. Everybody wants Bitcoin on Wall Street, and the current price is not seen as an issue. There is a kind of transfer of BTC between the Whales and the institutional investors.

The big question is whether the current price level can be sustained until the mass entry of retail investors into the market in 2021.

Nothing is less certain, because a correction is still more than likely. The most interesting thing will be to see if the $20K will play the role of important support if such a correction in the Bitcoin price were to occur. If the Bitcoin price were to rebound strongly on this $20K, this would be an excellent signal.

It would be a signal that the $20K is indeed likely to become a new baseline for the Bitcoin price.

If the $20K were to fail to play this important supporting role, Bitcoin price could re-test the $18.5K, and possibly the lower $15.5K — $16K zone.

In any case, one thing is certain: as time goes by, Bitcoin’s highs are always higher, while its lows are always higher as well. This shows that the adoption of Bitcoin continues to grow.

If Bitcoin’s annual low in 2020 was around $3.8K, this is due to a special situation with the coronavirus pandemic that triggered a liquidity crisis in March 2020 on a scale not seen in decades.

However, Bitcoin’s low in 2020 remained well above that of previous years:

Bitcoin’s yearly lowest price in USD — via Sylvain Saurel

In 2021, I don’t see Bitcoin having a low below $10K. So this trend will continue to accelerate.

In the days to come, it will be interesting to see if institutional investors continue to jump on all the BTC that are put on the market. Finally, let’s not forget that at the end of January 2021, the employees of American banks will have their annual bonuses. This will probably be the occasion to see even more new money coming into the Bitcoin world.

Until then, if a correction occurs, the best attitude to adopt will be the one followed by institutional investors: buy the dip. Success in the Bitcoin world never happens overnight. The secret is to be in Dollar-Cost Averaging (DCA) mode.

Buying Bitcoin when small corrections occur brings you closer to the big goal for retail investors in the coming months: owning at least 1 BTC.

Some people ask me what they should do when they reach the possession of 1 full BTC. Indeed, the number of addresses on the Bitcoin network owning at least 1 BTC has exploded in recent months. Once you own 1 BTC in full, why stop there?

Continue your DCA strategy to try to own 2 BTC. And so forth. Bitcoin is made to protect your wealth from monetary inflation in a way that is resistant to censorship. If you have hard-earned money that you don’t use to live on, there is no reason not to keep it safe within the Bitcoin network.

It’s up to you as always.