The cost of Bitcoin (BTC) attained a new record above $49,000 on Valentine's Day on Feb. 14, rising to as large as $49,344 on Coinbase.
There are 3 main reasons Bitcoin surged to a new all-time high, namel high stablecoin inflows, clean rest of the $38,000 resistance region, and a protracted consolidation phase.
Through the last several days, despite Bitcoin's consolidation under $38,000, on-chain analysts resisted the constant increase in stablecoin inflows.
According to data in CryptoQuant, an data analytics platform, the Stablecoin Supply Ratio (SSR) increased significantly as it rallied in the mid-$30,000 region.
After the amount of Bitcoin climbs in tandem with all the SSR ratio, then it implies it's likely being driven by sidelined capital re-entering the marketplace.
This trend is extremely optimistic since it demonstrates that the rally wasn't just driven through an over-leveraged futures market. In reality, it was genuine requirement from the place market that led the uptrend.
Atop the high stablecoin ratio, analysts resisted the decrease in selling pressure coming from miners.
The mix of the decrease selling pressure from miners along with the rising stablecoin inflows into trades catalyzed the ongoing Bitcoin rally.
$38,000 resistance breaks
Bitcoin was consolidating under the $38,000 immunity area for a prolonged period. This presented a threat to the short term bull cycle of Bitcoin.
After the price of Bitcoin hovers under a key resistance area for quite a while, it raises the probability of BTC falling to a lower support region to exploit lower liquidity.
This is partially the reason Bitcoin often dropped to around $44,000 until its eventual urge rally above $38,000.
Long consolidation was valuable for BTC cost breakout
A relatively long consolidation period normally leads to two situations: a severe breakdown or a significant breakout.
If Bitcoin rallies without strong principles to encourage the rally, then there is a bigger chance that the consolidation leads to a profound correction.
However, in the case of Bitcoin in the last 3 days, its consolidation phase under $38,000 was backed by rising stablecoin inflows, a top Coinbase premium, along with a normally large trading volume across both spot and futures markets.
Hence, even though the futures market remains highly leveraged and overcrowded, BTC has been able to push through the resistance area despite the risk of a lengthy squeeze.
In the foreseeable future, there are numerous reasons which make the muster sustainable. To begin with, the stablecoin inflows aren't slowing down.
Second, the current rally flipped the bearish market arrangement to a bullish short-term tendency across reduced time frames.
Provided that Bitcoin remains above the 38,000 level, that has turned into a support area, its near-term bullish market structure could remain intact.