Bitcoin (BTC) ignites price fireworks

Bitcoin

Bitcoin (BTC) ignites price fireworks

Firecracker ban? Bitcoin (BTC) ignites price fireworks

Despite a subdued New Year’s Eve mood, Bitcoin is already popping the champagne corks and laying its cards on the table for a promising 2021.

On the home stretch to the US$30,000 mark, the Bitcoin price (BTC) is putting in a hasty year-end rally. With a gain of 4.4 per cent in the last 24 hours, the largest cryptocurrency is Bitcoin Era trading at 27,986 US dollars as of the editorial deadline, just a few metres away from the stage goal. If Bitcoin breaks the next higher resistance at 29,726 US dollars, a direct rise above the ten-thousand mark is only a formality.

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Even if Bitcoin initially bounces off resistance, the preliminary year-end balance is more than respectable. As a reminder, Bitcoin started the new decade just above US$7,000. Barely 12 months later, the digital currency has posted an annual gain of around 280 percent. In 2020, the cryptocurrency has clearly demonstrated its immense potential and set the roadmap for the coming year. Both at the network level and with a view to market trends such as the increasing demand among large investors, the signs are also pointing to growth in 2021.

Bitcoin shortage

The fact that the limited BTC supply is gradually becoming scarcer has been an open secret at least since the large-scale purchases by institutional investors. According to bitcointreasuries, the account of such illustrious buyers as asset manager Grayscale, software company MicroStrategy and payment service provider Square alone already accounts for around 5.5 percent of the total amount in circulation. Since the introduction of BTC integration into its payment system, payment giant PayPal has also been getting involved in the market and is already buying more Bitcoin than it is adding.

Even laymen can see that the market is boiling over. The BTC demand of institutional investors exceeds the new supply generated by miners. Added to this are all the small investors, who in turn are creating increased demand. Thus, the available supply is gradually shrinking, which drives up the price while demand remains high.
BTC meltdown

Looking at the declining bitcoin reserves of the major trading venues illustrates this correlation particularly vividly. Since March, exchange holdings have fallen by around 20 percent and there is no end in sight to this trend.

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