3 Key Factors Why Bitcoin Price Exploded to $9.4K Overnight

Bitcoin price has soared from $7,700 to $9,500 in 24 hours, mainly driven by three key factors that triggered the short-term rally. The Bitcoin (BTC) price increased from $7,700 to $9,500 overnight, increasing by 23%, according to Coinmarketcap, in less than 24 hours.

The three main factors that catalyzed Bitcoin’s recent rally are record-high spot exchange volume, a breakout above historical resistance levels, and a noticeable rise in institutional demand.

In crypto, the term spot exchange refers to a platform that facilitates fiat to crypto trades. On Binance and Coinbase, for instance, users can trade Bitcoin with USD or stablecoins like Tether (USDT) without leverage. Volumes coming from spot exchanges are not inflated by leverage or borrowed capital. Spot volumes typically demonstrate authentic retail demand and they often increase during an accumulation phase.

Unlike past rallies, the recent upsurge of Bitcoin was primarily led by spot volumes. Binance and Coinbase saw record high daily volumes, as shared by Binance CEO Changpeng Zhao. The demand for Bitcoin on Coinbase reached a point where the exchange could no longer handle user activity for a temporary period.

All the while, the open interest of Bitcoin futures on BitMEX stayed below $500 million. The open interest of Bitcoin on BitMEX, which refers to the total amount of short and long contracts open in the market, remained above $1 billion in February 2020.

The relatively low volume of Bitcoin on futures exchanges and the dominance of spot platforms indicate that the upsurge from $7,700 to $9,500 was organic. According to a cryptocurrency trader known as Benjamin Blunts, the Bitcoin price broke all major historical resistance levels when it first surpassed $8,000. The 100-day and 200-day daily moving averages (DMA) and the 0.618 Fibonacci Retracement level were all broken simultaneously.

The quarterly report of Grayscale, which operates the Grayscale Bitcoin Trust, said that 88% of investments came from institutions. In the same period, the assets under management (AUM) of the Grayscale Bitcoin Trust just hit $3 billion, according to its CEO Barry Silbert. “88% of inflows this quarter came from institutional investors, the overwhelming majority of which were hedge funds,” said the investment firm.

The gradual increase of inflow in capital into institutional products of Grayscale since January 2020 indicates that institutions consistently invested in Bitcoin throughout the first quarter. A significant increase in organic retail demand resulting in surging spot volume, the breach of key resistance levels, and the accumulation of institutions created a perfect storm for Bitcoin ahead of halving, pushing it above $9,000.

3 Key Factors Why Bitcoin Price Exploded to $9.4K Overnight, CoinTelegraph, Apr 30