Bitcoin Destroys $28k As USD Gets Annihilated; Hitting A New 2020 Low
Bitcoin is facing an imminent supply-side crisis with only 22% of BTC circulating supply available in the market for buying and selling.
As we said, much like last week, this one started on a slight red note as Bitcoin consolidated around $26,000 only to rush higher but much faster this time around.
Breaking into a new all-time high at above $28,500 on the back of $5.88 billion ‘real’ volume, Bitcoin couldn’t sustain the bullish momentum and soon dropped to $27,345. But we are back on the move. Trader SalsaTekila noted,
“BTC looks like it wants to send. No sellers showing up at the highs. I'm not short anymore, nor ‘hedged', seems like price discovery is about to continue…”
Bitcoin is simply not taking a break, everyone is trying to time the markets, but at this point, it is anyone’s guess how high we will go in the short-term and if and when any meaningful pullbacks will make an appearance.
Even the more experienced and "better" traders on CT are trying to time the market, trade swings and getting left in tether or net short because lower timeframes looked bearish.
The market intentionally tries to trick you into thinking it can go down.
Then it doesn't.
— KING CO฿IE 🌙 (@CryptoCobain) December 30, 2020
Meanwhile, Bitcoin proponent Max Keiser, who has been waiting for a $28,000 target to hit, has increased his short-term target to $35,000 now that $28k has been destroyed.
Keiser has “high conviction on &35k,” a target that is hashrate-adjusted. The hashrate of the world’s largest network is at 134.46 Th/s, keeping around the all-time high of 157.65 Th/s, as per Bitinfocharts.
In the light of this strong hashing power being used to generate BTC, the next difficulty is expected to be between 3% to 10% that would be coming on January 9. He said,
“This is the equilibrium price based on the price-lagging-hashrate spread that I flagged last year. Now that $28,000 has been confirmed, $35k target looks like a lock.”
However, for this continuation to $30k Bitcoin needs to sustain the $27,000-27,500 support which could even take us to $32,800 but “losing $27,000 and correction is imminent,” said trader Michaël van de Poppe.
Imminent Bitcoin Supply Crisis
A big bull signal for Bitcoin is the number of BTC actually available for buying and selling. Out of the 88.5% of the total supply already mined, that is ~18.6 million, 78% of the circulating supply is considered illiquid while only 4.2 million BTC (22%) is available in the market for buying and selling, as per Glassnode’s analysis.
In 2020 alone, more than 1 million BTC became illiquid. This illiquidity points to the emergence of a supply-side crisis and “a sustained rise of illiquid bitcoins is an indication of strong investor hodling sentiment and a potential bullish signal.”
Not to mention all the institutional herd that is gobbling up BTC. According to the chief global strategist of Morgan Stanley Investment Management, Bitcoin could replace the dollar as a global reserve currency.
The USD Index in the meantime is at multi-year lows, currently trading under 90. All the money printing has pushed USD to a new 2020 low that was last seen in April 2018.
The greenback has lost 13% of its value since March when it initially jumped while all the other markets, stocks, precious metals, oil, and Bitcoin annihilated. But with the central banks around the world printing money like crazy, fiat is getting debased and every other asset class, especially Bitcoin is rallying hard.