3 reasons Bitcoin price just hit $16,000 for the first time since 2017

The price of Bitcoin (BTC) surged past $16,000 on Nov. 12 for the first time in nearly three years. The momentum of the dominant cryptocurrency is strengthening due to three key major factors.

The main catalysts behind BTC’s rally are the non-overheated derivatives market, repeated retest of $16,000, and the $14.9K whale supply zone.

The recent dip reset the Bitcoin derivatives market

On Nov. 10, the price of Bitcoin abruptly declined to as low as $15,072. The market drop occurred merely 24 hours after it saw another major dip to $14,805, which turned traders cautious.

But, the drop benefited Bitcoin for two key reasons. First, it allowed whales to take profit on their positions at around the $15,000 support level. Second, it neutralized the futures market by flushing out late buyers or long contract holders.

Resetting the futures market and the funding rate for Bitcoin futures contracts was critical for sustaining the ongoing BTC rally.

Futures exchanges in the cryptocurrency market use a mechanism called “funding” to achieve balance in the market. When the majority of the market is buying Bitcoin, then buyers need to incentivize short-sellers. Vice versa, when shorts make up for most of the market, sellers need to pay buyers.

Prior to the drop on Nov. 10, the funding rate of BTC was hovering above 0.01%. This indicated that the market was heavily longing or buying Bitcoin, making it overcrowded.

After the minor correction to the $15,000 support level, BTC futures contracts neutralized as funding rates stabilized.

The repeated retest of $16,000 weakened the resistance

Even until late Nov. 11, the $16,000 area served as a heavy level of resistance for Bitcoin. Traders pinpointed the presence of large sell orders at the resistance, indicating that whales are likely targeting this level.

According to Edward Morra, a Bitcoin trader, there is an abundance of sell-orders near $16,000. He said:

“Pushed through higher, think it goes for 6 Nov top at least and possibly higher, we have a lot of orders above $16k on Bitfinex.”

Despite the filing of large sell orders at $16,000, Bitcoin pushed through it due to repeated retests throughout the past week. The retests eventually weakened the resistance, allowing BTC to break through it.

The $14.9K whale support area held perfectly

Cointelegraph consistently reported throughout this week that $14.9K has become a whale support area.

Data from Whalemap shows that whale clusters form when high-net-worth individuals buy BTC and do not move the BTC. This shows whales are accumulating at a certain area, which is then considered a support level.

Despite extreme market volatility influenced by macro factors such as Pfizer’s vaccine development, Bitcoin comfortably remained above $14.9K. The trend has shown that it has become a stable support level for BTC.

Cameron Winklevoss, the billionaire co-founder of major Bitcoin exchange Gemini, emphasized the importance of BTC holding above the $14.9K to $15K support range. He said:

“Bitcoin closed yesterday above $15K for the third day in a row. This is the first time in history that bitcoin has held this price level for 72 hours. A new record.”