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Markets Report: Bitcoin close to ‘point of no return’ says analyst as BTC retargets $40,000

With recent all-time highs suddenly coming back into play, eToro exchange warns it may limit buy orders due to high demand/low liquidity

Bitcoin was increasingly primed to retake $40,000 on January 14 as overnight bullish moves combined with fresh evidence of a supply shortage.

Data from price trackers including CoinMarketCap and TradingView showed BTC/USD hit local highs of $39,689 on Thursday, up more than 10% in 24 hours.

Stock-to-flow points to big Bitcoin price changes

Overnight trading was brisk for the largest cryptocurrency, which had previously spent two days ranging in the lower $30,000 range after a dramatic price dip on Monday. Bitcoin was thus more than $8,000 higher versus its lows of $30,250 at press time.

While the market waited for a seminal test of $40,000, proponents seized on the latest uptick to pour scorn on naysayers, mostly the mainstream press, which had claimed that Bitcoin had just experienced a 2017-style crash.

In response, Gemini exchange co-founder Tyler Winklevoss tweeted:

“They said #Bitcoin died on Monday, but now it’s above 37k. Don’t listen to the noise, stay focused.”

Bitcoin’s “death” and rebirth since the weekend. Source: TradingView

As Modern Consensus reported, an essential level that Bitcoin needed to flip to support lay at $38,000, something which the spot market was firmly challenging on the day. 

For quant analyst PlanB, meanwhile, that was just a taste of what was to come. Highlighting his stock-to-flow-based Bitcoin price model, he noted that compared to previous bull runs, Bitcoin was only at the start line, and that serious gains should be imminent.

“$38K is nice, but I am still waiting for that larger monthly jump that usually marks the phase transition / the point of no return (red arrows),” he added in accompanying comments.

Bitcoin’s position and PlanB’s “point of no return” markers. Source: PlanB/ Twitter

Stock-to-flow calls for this watershed moment for Bitcoin to produce either a $100,000 or $288,000 price point during the current halving cycle, with PlanB recently hinting that he was more inclined towards the latter.

eToro: We might not have enough Bitcoin

As the weekend approached, alarm bells were ringing from one exchange warning that should price action continue higher, the market may get too bullish to cope. In an email to clients quoted by Bloomberg, eToro said that it may have to restrict how much Bitcoin they can buy.

“The unprecedented demand for crypto, coupled with limited liquidity, presents challenges to our ability to support BUY orders over the weekend,” it read. 

“In light of this, it may be necessary for us to place limitations on crypto BUY orders over the weekend.”

The unusual situation compounds an existing narrative which centers on an accelerating supply-and-demand problem in Bitcoin. As largescale investors take positions, liquidity evaporates, driving up spot prices but also compelling more buyers to enter as a result via a mindset known as “fear of missing out” (“FOMO”).

In a sign of just how much trading has expanded in 2021, Bloomberg quoted statistics from eToro which put its trading volumes 25 times higher than during the same period last year.

In the past 11 days, eToro has opened 380,000 accounts.

During price volatility this month, meanwhile, fellow major exchanges Coinbase and Kraken gained significant negative publicity over sudden outages which may have even contributed to the velocity of Monday’s drop.

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Anthony Bevan is a journalist focusing on disruptive finance and cryptocurrency, along with the changing face of the market as Bitcoin gains mainstream adoption. Journalists covering cryptocurrency for Modern Consensus May hold positions in some of the currencies they write about.