Not even three weeks ago some major US banks trash talked Bitcoin big time. A report released by Bank of America considered Bitcoin as an overvalued assed. A survey of Deutsche Bank revealed that most survey participants view Bitcoin as the most extreme bubble with most of the them giving it the maximum of 10 points on a 1-10 bubble scale. Also, UBS warned that crypto prices can go to zero.
For me this outrage against crypto in general and in particular Bitcoin is a strong indication that institutional investors were looking for a more favorable market entry point in Bitcoin. Trashtalking Bitcoin, making a killing on futures shorts and collecting Bitcoin below 30.000 USD. That move spectacularly failed since Bitcoin is not yet the market which can be manipulated in a big manner.
On February 16, 2021, Bitcoin soared above 50.000 USD. It was quickly sold off for two reasons:
- Large future shorts who couldn’t afford the momentum above 50.000 USD and moved the price down below within minutes. According to datamish.com the move above 50.000 was used for most BTC short position to close out their unhedged positions (red = unhedged positions; yellow = hedged positions)
- Overleveraged retail traders who were kicked out of their position once the price dropped quickly below.
It was just a matter of time before Bitcoin soared back above 50.000 USD and it is there to stay. So, it did just one day later. With zero borrowing rates from central banks, unprecedented stimulus from governments and increasing inflation expectations the outlook is bright.
Also exchange flows will continue to decrease due to institutional investors trying to grab a share of Bitcoins success (Tesla 1.5 Billion move, MicroStrategy announcing another round of buying Bitcoin, the rumors of Apple buying Bitcoin …) The below shows that less than 2.4 Million Bitcoin are available on exchange wallets and this will decrease over time squeezing the price of Bitcoin higher (Source: cryptoquant.com)
For me the most striking indication that Bitcoin will not consolidate around 50.000 USD is the exchange reserves of Stablecoins. Since Stablecoins are pegged to a low volatility asset, it is used to park money ready to enter the game. There is still a lot of money on the sideline waiting to enter the market once momentum sets in. (Source: cryptoquant.com)
So, it is not a question if Bitcoin will be above 100.000 USD it is rather a question when this will happen. This is only valid based on current market conditions and does not consider any regulatory concern which are out there.
