The price of Bitcoin lost the support level of USD 18,000, but several groups of whales at lower levels suggest that the drop will be aggressively bought.
The Bitcoin price (BTC) fell below the support level of USD 18,000 on November 22nd. This drop comes after BTC saw continuously high institutional and OTC (off-market) trading volume in November.
One hour chart of the BTC/USD pair.
Data suggest that the growing institutional demand was probably one of the main catalysts for the rise in the price of BTC to USD 18,965.
Key Bitcoin price metrics show that professional traders are nervous about the $19,000 level
According to Skew, Grayscale Bitcoin Era app volume in the over-the-counter markets increased significantly in the fourth quarter.
Over-the-counter markets are stock exchanges in the U.S. that allow institutional and reputable investors to purchase various securities. Grayscale Bitcoin Trust operates in these markets, similar to an exchange-traded fund (ETF).
Daily volume of Grayscale Bitcoin Trust.
This Bitcoin rebound is led by the institutions
There is a clear difference between the current upward trend and the 2017 rally. This time around, Bitcoin has shown more composure and stability throughout the rally, consecutively recovering the main resistance levels.
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Bitcoin experienced a large increase in spot volume, open interest in futures exchanges and institutional demand. However, several metrics, such as Google Trends, have shown that the interest of the conventional public in Bitcoin is relatively low.
The combination of the two factors mentioned above suggests that institutions have probably been the main driving force behind the recent surge in BTC.
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The large participation of institutions in a prolonged Bitcoin rebound is optimistic because institutions are likely to accumulate BTC as part of a long-term strategy.
This trend explains why most of the major declines Bitcoin experienced in November saw aggressive purchases. As reported by Cointelegraph, Dan Tapiero, co-founder of 10T Holdings, said that „the big kids will now buy the falls.
Tapiero also emphasized that the real fundamentals are driving the current trend, unlike the mania seen in 2017. He said:
„The third wave will dwarf the 2017 movement and should persist for several years.
Michael Novogratz, a billionaire investor in Bitcoin, also said that BTC became an institutional asset along the way.
In recent months, more institutions, hedge funds, and investment banks have begun to compare BTC to gold. Novogratz told CNBC:
„Bitcoin is now an institutional asset. Period. The good news is that most institutions are still not getting in. That’s why 2021 will be as good or better than 2020.
3 levels of whale groups to consider while BTC sinks below USD 18,000
Whales, or high net worth investors, often use the over-the-counter markets and exchanges simultaneously to accumulate large amounts of Bitcoin.
Throughout November, analysts at on-chain analysis firm Whalemap discovered the emergence of large groups of whales.