The bitcoin price roared to a new 2019 high in the early hours of Wednesday, briefly touching $13,000 on the Huobi exchange. Bitcoin is now at levels not seen since January 2018 with a market capitalization of $224.7 billion.
But where is the money coming from? Data from CoinLib reveals that BTC’s latest rally is not driven by new investor money. Instead, existing crypto traders are simply moving money back into bitcoin from the sidelines.
After breaking the psychological $10,000 barrier, the BTC price raged higher in a matter of days. Speaking to CCN.com, eToro senior analyst Mati Greenspan called it an “explosive situation” backed by high transaction numbers and strong volume on Messari’s real-10 volume indicator, which eliminates volume from exchanges suspected of wash trading.
“We’ve moved from spring to summer. It’s hot out there!”
The chart below shows the vast majority of money moving into bitcoin over the last 24 hours came from Tether, a stable coin used by traders to hold crypto at a stable value.
In other words, most of the bitcoin trading volume came from existing traders moving money back into play. Fiat flows from the dollar and yen represent a much smaller portion of the volume, suggesting “new money” is not yet driving the market. As Greenspan confirmed to us:
“This is not new investors. The rally is being driven by those already familiar with the market.”
As a caveat, CCN.com has not been able to confirm whether the CoinLib data takes into account “reported exchange volumes” which may be subject to manipulation, per a recent Bitwise report.
The data is also backed up by the lack of mainstream awareness of bitcoin’s move past $10,000. As CCN.com reported, Google searches for “buy bitcoin” are 93 percent lower than the retail-driven mania of 2017’s run-up.
If the analysis is correct, there’s still an enormous sum of money to move into the market as Wall Street lines up numerous bitcoin investment vehicles.
Technical analysts see strong resistance for bitcoin around $13,700 and $14,200. If it blows past those markers, there’s little to stop it returning to all-time highs of $20,000.
On a longer time-frame, Morgan Creek Digital partner Anthony Pompliano sees the bitcoin price catapulting to $100,000 by the end of 2021. He cites multiple catalysts on the horizon, including the launch of institutional vehicles like Bakkt, ETF approvals, and the bitcoin halving event in 2020.
Despite the “explosive” 40 percent run-up in June, Greenspan sounded a note of caution. While he’s confident the market has moved from spring to summer, he’s reluctant to call an all-out bull market.
“I’m still hesitant to call a bull market. I want to see healthy pullback and recovery.”
Since bitcoin bounced off the $3,200 low, it has chalked up only a couple of 10 percent pullbacks on the journey to $13,000. As CCN.com reported, we historically see numerous 20-30 percent drawdowns in bitcoin bull markets.
A healthy retracement followed by a strong recovery would truly usher in the bulls.
Click here for a real-time bitcoin price chart.