Bitcoin has just reached $16,000 for the first time since 2017: this is why

The price of Bitcoin has exceeded $16,000 for the first time in almost three years, thanks to a momentum reinforced by three factors

Today, November 12, the price of Bitcoin (BTC) exceeded $16,000 for the first time in almost three years. The momentum of the main cryptocurrency is strengthening thanks to three main factors.

The key reasons for BTC’s rise are the unheated derivatives market, the various tests at $16,000 and the whale offering area at $14,900.

The recent decline has reset the derivatives market on Bitcoin
On November 10th, the price of Bitcoin fell sharply to $15,072. The contraction occurred just 24 hours after another sharp fall to $14,805, which urged traders to exercise caution.

However, the correction helped Bitcoin for two important reasons. First, it allowed whales to make profits on their positions around the $15,000 support level. Second, it neutralized the futures market by eliminating late buyers and long contract holders.

Restoring the futures market and the funding rate for Bitcoin futures contracts was key to sustaining BTC’s ongoing rise.

Futures exchanges in the cryptocurrency market use a mechanism called „funding“ to achieve balance in the market. When the majority is buying Bitcoin, buyers must incentivise short-sellers. The same goes for the opposite situation: when shorts make up a large part of the market, sellers have to compensate buyers.

Before the drop on 10 November, BTC’s funding rate was above 0.01%. According to this factor, the market was strongly long on Bitcoin, and consequently overcrowded.

The slight correction towards the $15,000 support level rebalanced BTC futures contracts and funding rates stabilised.

The volume in the Bitcoin futures market was in stasis while the market stabilised.
The volume in the futures market on Bitcoin in stasis while the market stabilizes. Source:
Repeated testing at $16,000 weakened resistance
Until November 11, the area around $16,000 acted as a strong resistance for Bitcoin. Traders have reported large sales orders, indicating that whales are probably targeting the level.

According to Edward Morra, a Bitcoin trader, there are many sell orders in the vicinity of $16,000:

„If he goes any higher, I think he will try to go at least as high as November 6th and possibly higher, we have a lot of orders above $16,000 on Bitfinex“.
Despite the strong sales pressure at $16,000, Bitcoin has gone further thanks to the numerous tests carried out during the past week, which eventually managed to weaken the resistance.

The support zone of the whales at 14,900 has held up perfectly.
Cointelegraph has reported several times during the week that the $14,900 has become a whale protected support area.

Data provided by Whalemap show that whale clusters are formed when high-net-worth individuals buy BTC and do not move them. The price at which these purchases are grouped is then considered a support level.

Whale clusters in Bitcoin at $13,600, $13,740, $14,120 and $14,900.
Despite extreme market volatility influenced by macro factors such as the development of the Pfizer vaccine, Bitcoin remained well above $14,900. The trend has shown that the level has become a stable support for BTC.

Cameron Winklevoss, the billionaire co-founder of Gemini, one of Bitcoin’s major exchanges, highlighted the importance of BTC remaining well above the support range between $14,900 and $15,000:

„Yesterday Bitcoin closed above $15,000 for the third day in a row. This is the first time in history that Bitcoin has maintained this price level for 72 hours. A new record.“