Confounded By The BTC Price
A lot of people within the Crypto space are quite confused as to why the price of BTC has not yet begun to surge significantly in 2020. The halving has come and gone, the FED is still printing and yet Bitcoin is still trapped below the 12K level. Bitcoin appears to be stuck in a trading range between $9600 and $12500, which can still create some decent trades for day traders but what about the hodlers? There is also the fact that we have all been waiting so long to see Bitcoin break above 14K and just keep going on to 20K and beyond.
We have seen an unprecedented amount of private companies, hedge fund managers and the like start flooding into Bitcoin and yet the price remains fairly unchanged. When we look at the volumes that are being bought up by these firms, it seems almost impossible that such large volumes are not affecting the price. Well, that is in fact the case and that is why these companies have chosen another method to acquire their Bitcoin.
Corporate Money Is Always Smarter Than Retail
When you visit any large exchange such as Binance and inspect the Bitcoin order book you will notice that the volumes are not very high, at least when compared to the volumes that these corporate entities are purchasing. If any significant buy order was processed on even a large Crypto exchange, the buy wall would be completely eaten away. This in turn would skyrocket the price of BTC. So, if that is the case how are these companies getting their hands on all of this Bitcoin?
Through OTC desks and miners. OTC stands for "over the counter" and has zero impact on the spot price of BTC. In other words, if you settle on a certain price via an OTC desk, you will be able to buy all of your holdings at that price. This is almost impossible to attain via an exchange and reveals exactly how so much Bitcoin has changed hands without affecting the price. Large miners can also agree on a certain price with entities wishing to purchase BTC and in so doing avoid slippage on exchanges.
Miners can secure their desired profits and entities can secure a fixed price. Another benefit for entities to avoid exchanges and buy direct from the miners is that they receive freshly minted BTC. This BTC has no ledger record and so cannot be linked or associated to any other activity, legal or not. Buying direct from the miners guarantees fresh, pure BTC with zero history.
This is not really a concern of many people today but I believe that in the future miners will be able to sell fresh BTC at a premium based on it's purity and spotless history. Entities will continue to amass large amounts of Bitcoin without the price being affected too much. What is going to drive the price north is once again going to be the retail investor. Once the effects of the halving fully settle in and the retail investors enter the market again we will see BTC make significant moves.
My thoughts are that within the next few months we will definitely see a BTC price above 13K. This could take place even sooner but there is still one more concern. If traditional markets collapse again BTC will be pulled down, though not for long, we will suffer in the short-term. Let's hope markets remain stable until elections. This will obviously be on Trump's agenda and in this particular situation Crypto markets are set to benefit. Just as in recent times, the FED has continued to be Bitcoin's greatest advocate, marketer and Promoter.