The price of Bitcoin (BTC) has fluctuated in the range of US $ 8,600 to US $ 10,000 over the past two months. BTC has shown low volatility since May, following rejection at the US $ 10,400 level. However, there are five fundamental factors that indicate the trend of BTC will continue to increase in 2021.
1. Low Bitcoin Volatility
According to Skew data, Bitcoin's 10-day volatility fell to its lowest point this year on June 24. This shows that investors are cautious because BTC is at a critical price. Investor sentiment in the medium term remains positive with external conditions, such as the COVID-19 pandemic holding back crypto prices.
2. Massive Bitcoin Accumulation
According to Glassnode's CTO, Rafael Schultze-Kraft, Bitcoin or HODL deposit data shows a high level of confidence among investors. The supply of Bitcoin, which had not moved for more than a year, hit a high, at 61 percent. This means there is very little sentiment to sell Bitcoin at its current price.
Schultze-Kraft emphasized that in keeping with the size of HODL's change in position, investors are accumulating Bitcoin massively by 2020. If this figure remains positive, it means investors are not moving funds from personal wallets to crypto exchanges for sale.
3. Institutional Investors Continue to Buy Bitcoin
Since March 2020, the assets under management of the Grayscale Bitcoin Trust have increased from US $ 1.577 billion to US $ 3.451 billion. This increase indicates an increase in demand from institutional investors.
The number of Grayscale Bitcoin Trust assets reaching a high, at a time when the Bitcoin price fell more than 50 percent from its peak, is a positive sign. This means that financial institutions have high confidence in the long-term trend of BTC.
4. Optimistic Technical Structure
Crypto expert Nunya Bizniz said the six-month Bitcoin price chart is showing a green color according to Tom Demark's Sequential Indicator system. Every time the green color appears, Bitcoin has experienced price spikes for several years.
Futures trading data shows that the current price is not overbought. The price of Bitcoin could go down if it was due to liquidation of leveraged traders. Crypto analyst Byzantine General said the level of funding of the perpetual swap contract suggests BTC has not been overbought.
5. Increase Hashrate
When the halving happened in May 2020, crypto analysts expected Bitcoin's hashrate to decline. However, data from Blockchain.com shows Bitcoin's hash rate is back to its pre-halving level. This means the crypto mining industry remains healthy after halving and selling pressure from miners eases.
The combination of the small number of miners selling Bitcoin, an optimistic long-term technical structure, a growing HODL and interest from large investors and institutions, increases the likelihood of a new rally in 2021.