All vital statistics favor bitcoin while still setting new highs in price. But not only has the $ 20,000 price level been reached; Bitcoin is likely to go much higher altogether. Weak hands and scalpers who squeeze every dollar out of their position are now being left behind as bitcoin continues to trend higher.
The Case For $ 20,000-Plus Bitcoin
It is for everyone to look beyond the trading value exchanges that he can depict at any given time. Every time someone looks at the price, that figure represents a temporary snapshot of the inevitable. Whether bitcoin is $ 17,000 or $ 19,000 at any given time will not make much difference.
The world’s leading cryptocurrency has now broken the next $ 20,000 psychological barrier in search of even higher price targets. Most weekly red candles have failed to affect the price in the long run throughout 2020 and it is important to look past them now that we have closed this central mark.
When one begins to look at the core statistics, there is no solid argument against bitcoin staying above $ 20,000 in the future. All of the critical metrics confirm that there is less bitcoin going around to buy at these prices. It’s only a matter of time until the price reacts positively.
And the infamous $ 20,000 level is nothing but a stepping stone for what is yet to come in the future.
1. Exchange Reserves Dropping
One of my favorite metrics to track is the delivery of bitcoin across central exchange wallets.
The chart below confirms that there has been a continued decline in supply available since March 2020. This trend is also not slowing, despite some slight increases in BTC values on the way. For some time now, there have been less than 3 million BTC in exchange wallets. A surprising trend, given how the value stayed above $ 18,000 in recent months with no issues.
This is arguably still over 10 per cent of the circulating supply. And that’s a valid point, but it’s not significant in the grand scheme of things. If 90 percent of something is not available for convenient purchase, the price of that item or asset will always rise. For bitcoin, the convenient-accessible supply is declining rapidly.
Part of this momentum is being helped by all of the companies that are suddenly investing in bitcoin. The information below shows how companies approach the world’s leading cryptocurrency today.
None of these companies appear to be in it for the short term either. All of these treasures helped to further reduce the available BTC supply, creating a new degree of scarcity that pushed us past $ 20,000.
2. Fewer people are storing BTC on exchanges
Making things more interesting is the ongoing Bitcoin net flow (the difference between bitcoin flowing in and out of exchange wallets) among known exchanges.
Throughout 2020, there is more negative outflow compared to positive numbers. This is another astonishing trend given that the value of BTC has risen sharply since March 2020. That alone tends to spur more people to move their money off exchanges. I plan to keep my money in a hardware wallet until we reach a six figure price.
As more and more BTC leave exchanges on a daily basis than can be added in ongoing deposits, the scarcity factor will become sharper. Bitcoin already has a limited supply. More and more pieces of the available supply are made inaccessible every month.
It was only a matter of time until the market moved into higher gear and fired past that $ 20,000 “resistance level”. This expected price surge occurred before the end of 2020, indicating that next year could be an exception for bitcoin.
3. Traces of Dormant Supply Not Affected
One aspect of the bitcoin price that many new entrants and speculators tend to overlook is the idle supply. The Glassnode chart below confirms that 33.153 percent of bitcoin supply has not moved in a new direction over the past three years. The owners of these BTC balances have held during the 2017 price run and are now doing the same.
As an analyst, these statistics show me that BTC holders are not interested in selling before a much higher value becomes the new normal. That can be $ 50,000, or even six figures per BTC, for everyone we know. More importantly, traders may not find this supply on other exchanges or trading platforms for some time to come.
Again, this is a chunk of BTC that no one will be able to access for some time to come.
4. New Use Cases for Bitcoin Holders
Finally, I am impressed by how other exchanges and platforms aim to bridge the gap between bitcoin and decentralized finance. For example, Lightning Labs has launched its Lightning Pool liquidity market, IOVlabs has introduced a new sidechain model to enable greater flexibility with RSK and at MXC Exchange, we design a subscription product that offers returns on locked BTC .
While this model does not just apply to bitcoin, the world’s leading cryptocurrency is finally getting the support it deserves. Devolved currencies without Bitcoin will have no hope of long-term survival. In addition, there is a lot of liquidity among bitcoin holders who are not interested in selling at the current price.
If all of the above doesn’t make one bullish on bitcoin and its potential to go well beyond the $ 20,000 price tag, I don’t know what will.
This is a guest post by Alex Zha. They are solely their own opinion and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
