Twenty thousand isn’t just a nice round number. It’s a floodgate that’s now been opened.
Exchange data shows exactly how the dollar price of bitcoin broke the key psychological $20,000 threshold in early trading hours Tuesday and kept on going. The pattern could be a sign of long pent-up demand for the cryptocurrency, and underscores that seemingly arbitrary levels do matter to the market.
According to data provided by on-chain crypto analytic firm CryptoQuant, there was an unusual spike in the number of stablecoin inflow addresses for all exchanges, an indicator of “extreme buying power,” between 13:30-13:40 UTC (8:30 a.m. to 8:40 a.m. ET).
“Many people were trying to deposit stablecoins to buy BTC,” Ki Young Jun, chief executive of CryptoQuant, told CoinDesk.
A chart provided by crypto data portal CryptoWatch shows that approximately $45 million was traded on Kraken’s BTC/USD spot market from 13:30-14:00 UTC as bitcoin’s price moved up by 5%.
It was not clear what drove the surge of bitcoin buying orders on exchanges at the time, but it occurred just as CoinDesk published a story that U.K.-based Ruffer Investments confirmed it invested about $744.26 million worth of bitcoin in November.
Also on Wednesday, the Chicago Mercantile Exchange (CME) announced it will launch a futures contract on ether in February 2021.
Some analysts are anticipating larger buyers in the coming months.
“Looking forward to 2021, we should expect the outsized bids of institutions to have a much greater determining influence on the price of bitcoin and other cryptocurrencies,” Artur Sapek, founder of CryptoWatch, told CoinDesk.
Read more: Bitcoin 101
With an increasing number of institutions in North America and Europe buying bitcoin as an inflation hedge, there is a shrinking supply of the cryptocurrency in the marketplace, according to Simons Chen, executive director of investment and trading at Hong Kong-based crypto lender Babel Finance. Demand was thus able to break through a significant amount of resistance near the previous record high.
“There had been some orders sold at around $20,000 from people who bought bitcoin at high prices back in 2017,” Chen said. “But those orders are mostly gone by now and $20,000 has become the new supporting level.”