The price of Bitcoin (BTC) hit a new record of over $ 49,000 on Valentine’s Day on February 14, rising to $ 49,344 on Coinbase.
There are three main reasons why Bitcoin has soared to a new all-time high, name-high stable Bitcoin inflows, a clean break of the USD 38,000 resistance area, and an extended period of consolidation.
High stable coin inflows were key
Over the past few days, on-chain analysts have noted the steady rise in stable bitcoin inflows despite the consolidation of Bitcoin below $ 38,000.
According to data from CryptoQuant, a data analytics platform, the stablecoin supply ratio (SSR) rose significantly as it rebounded from the region at $ 30,000.
The SSR indicator shows the ratio of the market capitalization of Bitcoin to the aggregated market capitalization of stablecoins.
If the price of Bitcoin rises in line with the SSR rate, it means that it is likely to be driven by the re-entry of secondary capital into the market.
This trend is very optimistic as it shows that the rally was not just driven by an over-leveraged futures market. In fact, it was real demand from the spot market that led the upward trend.
In addition to the high stable coin quota, the analysts also noted the decrease in sales pressure from miners.
It’s also interesting that miners haven’t been so keen on selling their #Bitcoin in the past two weeks.
Either they are convinced it will go up or they just run out of bullets. pic.twitter.com/GDYzP33948
– Lex Moskovski (@mskvsk) February 12, 2021
The combination of lower miners’ selling pressure and the increasing inflows of stable coins into the exchanges catalyzed the ongoing Bitcoin rally.
$ 38,000 resistance breaks clean
Bitcoin consolidated below the $ 38,000 resistance area for an extended period of time. This posed a risk to Bitcoin’s short-term bull cycle.
If the price of Bitcoin hovers below a major resistance area for a long time, it increases the likelihood that BTC will drop to a lower support area to tap lower liquidity.
This is in part why Bitcoin regularly fell to around $ 44,000 before its potential impulse rally above $ 38,000.
A long consolidation was beneficial for the BTC price breakout
A relatively long period of consolidation usually results in two scenarios: a major failure or a major outbreak.
If Bitcoin rebounds with no solid fundamentals to support the rally, there is a greater likelihood that the consolidation will result in a profound correction.
In the case of Bitcoin in the past three days, the consolidation phase below USD 38,000 was supported by rising stable Bitcoin inflows, a high Coinbase premium and a generally high trading volume on both the spot and futures markets.
Although the futures market remains heavily indebted and overcrowded, BTC has been able to penetrate the resistance area despite the risk of long pressure.
In the foreseeable future, there are several reasons that will make the rally sustainable. First, stablecoin inflows are not slowing down.
Second, today’s rally has reversed the bearish market structure into a bullish short-term trend over lower time periods.
As long as Bitcoin stays above the $ 38,000 level, which has become a support area, its short-term bullish market structure would remain intact.