Bitcoin has now been trading above $13, 000 for a couple of days and all signs point to an ongoing bull run.
The recent announcement by PayPal to support crypto assets triggered a market rally that was already bullish which saw bitcoin easily surpass the $13, 000-mark.
SEE ALSO: You Can Now Buy, Sell, Hold, and Use Cryptocurrencies on PayPal Starting in 2021
A BitKE analysis shows an intersection of several factors leading to this run.
- Reduced supply – The May 2020 bitcoin halving now means that the availability of bitcoin has been reduced drastically. With this shrinking supply and rising demand, the market forces of supply and demand kick in driving the price of bitcoin up in the process
- Increased Institutional Interest – 2020 has seen an increase in institutional investment into bitcoin and digital assets. Companies like MicroStrategy, GrayScale, and Square have taken up substantial amounts of bitcoin. GrayScale, for example, now gobbles up 30% of all newly minted coins every month, which is likely going to result in a price hike
- 2020 political climate – Ongoing political protests and the US election have all resulted in bitcoin looking particularly attractive amidst these uncertain times. Government sanctions and restrictions in countries like Nigeria, Venezuela, Iran, Argentina, and Turkey have seen a demand for bitcoin in these places thereby making it a highly sought-after asset
- The long/short ratio – Technically, most retail speculators have been shorting bitcoin futures since first week of September lows, according to the long/ short ratio of one of the biggest exchanges by volume, OKex. Yet the fewer whale accounts have been building their long positions slowly leading to the grind up that saw bitcoin price break above September value this October. Shorts continue to be outsmarted in this 4D chess game, slow liquidations are now the norm, and soon, we shall likely witness large short capitulations as the phase of disbelief turns to a blown out rally
- Covid-19 – The current pandemic has also contributed significantly to the bull run as bitcoin continues to gain value since the beginning of 2020. As world currencies lose value, most people are seeking safe havens and bitcoin becomes an easy asset to hedge against such uncertain times
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