By Ross Macdonald
January 2nd 2021. We are into a new year, and while many slept in North America, Bitcoin went on a rally to blast through $30,000 USD and continue through $31K, $32K and $33K briefly with a short retracement to$30,700.
Volatility is back! The tool that traders love and which noobs lose sleep over and sweat while they can’t watch their charts. At times in 2020, even Bitcoin maximalists have referred to BTC as a stablecoin, poking fun at its moments or lack of price movement.
What caused this massive jump in price? Coinbase Pro trading had over $1.3 Billion dollars traded from USD to BTC in the last 24 hours, which continues to climb.
What is Coinbase Pro vs Coinbase.com?
It’s a more advanced service where you can use limit orders to specify when to buy and sell. It operates like a very simple exchange which is a good user experience for the public. Why is a large amount of capital changing hands from USD to BTC all at once? Only Coinbase would know this. Accounts here have limits, so unless a variety of users cleared limits or coordinated their purchases, this could be a small group of whales spending north of 1.3 Billion dollars, or a larger group of users. The next closest exchange for volume in 24 hours was Binance with $287 Million USD, which is less than a quarter of the Coinbase Pro volume. Typically Binance has the highest trading volume in most high market cap cryptocurrencies, which is why this anomaly can be identified.
Anyone who is HOLDing will enjoy seeing their portfolios grow and will see a retracement at some point, but in the meantime the price increase of BTC really fits the statement: “It’s all a part of the plan”.
Prior to this price run, we had the 2020 Bitcoin Halving which reduced the BTC supply created per block from 12.5 to 6.25 BTC every 10 mins globally. Each halving has had large price increases occur after the event. This was not effected immediately and nobody expected that, but like clockwork, price has been effected by supply. The supply change always compresses demand for BTC, just as Satoshi Nakamoto had designed with mind altering results which have come approximately 18 months later and just 8 months now since the 2020 halving.
|Halving||Date||New BTC Block Reward (10mins)|
|Halving 1||28 November 2012||25|
|Halving 2||9 July 2016||12.5|
|Halving 3||11 May 2020||6.25|
|Halving 4||Expected 2024||3.125|
If you would like a detailed account of the timeline Bitcoin has had with events related to price action, checkout this interactive chart from 99Bitcoins.com.
Traders have much more to think about. Those willing to sell BTC and willing to ride volatile price fluctuations will have to consider many statements that OG’s in the blockchain industry think about:
“Always Take Profit”
“Past Performance is not an indicative of future results.”
“The Key to trading is emotional discipline.”
The fact is that right now is a dream for those in the blockchain industry. If we knew we would be here 12 months ago, it would be all champagne bottles and celebrating. Currently though many investors have been shaken out or struggling due to economic downturn in 2020 which changes how we are all invested into Bitcoin.
Questions for 2021:
- Will Bitcoin be more widely adopted as a currency?
- Is Bitcoin best used as a store of value?
- Will more businesses accept Bitcoin as a payment in 2021?
- What are the best financial decisions with Bitcoin for investors and the public this year?
- What factors and events coming will greatly effect Bitcoin this year?
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