The Bitcoin price surged above $35,000 overnight, recording a 10% increase within 12 hours. The major catalyst behind it has likely been the aggressive accumulation of BTC from buyers on Coinbase.
Throughout the past week, whenever the Bitcoin price was trading higher on Coinbase, a major rally followed.
I mean, why not?
35k wall, pfff.#Bitcoin pic.twitter.com/Yn8WHQytBo
— Preston Pysh (@PrestonPysh) January 6, 2021
Why does a Coinbase premium typically lead to a Bitcoin price rally?
When there is a premium on Coinbase, it means buyers on Coinbase are relentlessly bidding to purchase Bitcoin.
This causes the buyer demand for BTC to increase all around, leading the price to spike rapidly.
High-net-worth investors typically purchase Bitcoin through the Grayscale Bitcoin Trust and the CME BTC futures exchange.
However, as seen through MicroStrategy’s massive Bitcoin accumulation on Coinbase, high-net-worth investors can still buy BTC on Coinbase.
The timing of the appearance of the premium on Coinbase was critical because the selling pressure from Asia was re-emerging.
On January 5, data from CryptoQuant showed that whales in South Korea deposited $60 million to Bithumb.
Bithumb is South Korea’s biggest cryptocurrency exchange and it is one of the few exchanges that could handle such a large order if it was to be placed.
Considering that the Bitcoin price increased overnight despite the large deposit into Bithumb, it is likely that buyers in the U.S. overran the sellers in Asia.
What do traders think?
David Puell, a well-known on-chain analyst, said that the Bitcoin price cycle is currently not bearish. He said:
“Updated dormancy flow, which I don’t recall seeing live. Hasn’t crossed its bull/bear threshold. IMO this is not bearish, since the current primary trend is quite obvious. It instead makes me wonder: how much higher does price has to go to get this anywhere near overbought?”
When a level with stacked sell orders get breached, it could cause a cascade of shorts to get liquidated, pushing the price of BTC higher.
Bitcoin, currently ranked #1 by market cap, is up 9.81% over the past 24 hours. BTC has a market cap of $655.28B with a 24 hour volume of $68.21B.
Bitcoin Price Chart
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