Bitcoin explodes above $23,000 – What’s behind the massive spike?

  • The Bitcoin price has surpassed $23,000 as a result of a massive rush of investors.
  • The reasons for the rally are diverse and are somewhere between FOMO, institutional adoption, currency devaluation and an influx of investors.

The Bitcoin price is out of control. After the price broke through the psychologically extremely important mark of 20,000 USD yesterday, there is no stopping it. Investors, whether retail or institutional, seem to be rushing into the market in fear of missing a good entry price.

At the time of writing, Bitcoin is trading at around $22,900, up 17.1% over the past 24 hours. For a short time, the price was already close to USD 23,800.

Of course, as always, we can only speculate about the reasons for the massive rally. Nevertheless, FOMO (“Fear of Missing Out”) currently seems to be a driving factor for the Bitcoin price. The clear break of the all-time high may have triggered the fear of missing out on “something” in many investors.

Santiment’s data confirms that this fear affects not only retail investors, but also institutional investors. As the data analytics firm revealed today, 34 new addresses containing between 100 and 10,000 BTC were created just before this spike. This according to Santiment is the largest gain in addresses since November 29, as the chart below shows.

santiment Bitcoin addresses


Possibly another driver of the rally may have been the bitcoin options market. As the analytics firm Skew found out, yesterday was the first day in Bitcoin’s history that the market exceeded a daily value of one billion USD.

Skew Bitcoin Optionen


A third factor may have been yesterday’s decision by the Federal Reserve. After its two-day meeting, the Federal Reserve committed to continue buying bonds until the economy reaches full employment and inflation remains at 2%. Thus, according to CNBC, the FED is continuing its pace of purchases of at least $120 billion per month. Fears of further currency devaluation may have also driven institutional investors into Bitcoin in particular.

As CNF has reported in recent weeks, major Wall Street firms and insurance companies, including MicroStrategy, Square, Guggenheim Investments, MassMutual, and just 2 days ago Ruffer Investments, have entered the Bitcoin market and bought millions, contributing to a possible supply crisis. 

What follows after the Bitcoin all-time high?

Michaël van de Poppe stated in a new analysis of the crypto market that $19,500 was the crucial level that triggered the “flip” and thus FOMO among investors. This level also caused altcoins to experience a sell-off, while investors had the urge to jump on the exploding Bitcoin price.

As the analyst notes, the Bitcoin price is currently in an “overextended phase.” Whether BTC will continue to rise, and how far, no one knows, because Bitcoin is in absolutely unexplored territory:

In general, we are getting to an overextended phase at every level at this point, at every time frame which means that the critical level to hold is still the same area. So we see that we got this break above $19.5k and this also the range you to see holding. […] Are we continuing to going up from here? Honestly I don’t know, nobody knows.

Trading veteran Peter Brandt noted in a similar tone via Twitter that while the new all-time highs clearly confirm the bull run, no conclusions can be drawn about future moves from a technical chart analysis perspective:

New highs in $BTC Now, that’s a big YELM New highs are always a good indicator of healthy bull trend, but other than that the new highs mean very little of technical significance.

About Author

Jake Simmons has been a crypto enthusiast since 2016, and since hearing about Bitcoin and blockchain technology, he's been involved with the subject every day. Beyond cryptocurrencies, Jake studied computer science and worked for 2 years for a startup in the blockchain sector. At CNF he is responsible for technical issues. His goal is to make the world aware of cryptocurrencies in a simple and understandable way.

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