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3 reasons Bitcoin price just hit $11,000 despite altcoin stagnance

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Within the last hour, the price of Bitcoin (BTC) surpassed $11,000 across major exchanges, including Coinbase and Binance. This comes after nearly two weeks of low volatility as the cryptocurrency market remained stagnant and Bitcoin price was pinned below multiple resistance levels.

BTC/USD daily chart. Source: TradingView.com

Unlike the previous rallies which saw Ether (ETH) lead the Bitcoin upsurge, only BTC has moved higher whereas other major cryptocurrencies are still in the red. Decentralized finance (DeFi) tokens, which outperformed BTC throughout August, have been underperforming in the past several days.

Negative funding rates

The recent uptrend of Bitcoin has many irregular patterns compared with previous uptrends. BTC has been rallying on its own in the past three days, accompanied by negative funding rates.

Funding is a mechanism used by Bitcoin futures exchanges to ensure balance in the market. If the majority of traders in the market are betting against an asset’s price by shorting, then short contract holders have to compensate long holders. The inverse of this process applies when traders are long on an asset.

Bitcoin funding rates on Skew show that the funding rates still remain mostly negative across major exchanges and this indicates that traders are continuing to short BTC despite its upward movement.

The data suggests three possible trends: shorts are being squeezed, the spot market leading the rally, or futures are having a minimal effect on BTC price.

According to TradeLayer founder Patrick Dugan, BitMEX is falling behind in liquidity compared to the levels seen in March. The open interest of futures exchanges has declined in recent weeks, suggesting that futures activity has declined.

Various data points also hint at the spot market leading the current rally. If the demand from the spot market is behind the rally it is considered an optimistic trend.

When the futures market causes BTC to increase, it often causes the market to become vulnerable to long squeezes. But if the spot market is pushing BTC up, the chances of a big long squeeze causing a massive correction is low.

$11,000 remains a resistance level

Still, it is premature to expect an extended rally from $11,000. Traders have pinpointed the $11,000-$11,300 area as a major resistance range. There is a high probability that a rejection could happen, and $10,100 and $10,500 remain as key support levels.

On Sept. 15, Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said that breaking $10,900 would likely result in $11,300. He said:

“Levels to watch on $BTC. Breaking $10,900 -> $11,300 next. Losing $10,600 -> $10,300 next.”

But, a major BTC rally above $11,300 is difficult to project based on its recent performance. After its steep fall from $12,500, the $11,300 level solidified as a resistance level.

The Fed meeting

The Bitcoin upsurge also coincided with the recovery of gold and the intraday rally of the U.S. stock market. The simultaneous uptrend comes as the Federal Reserve hosts a meeting to decide interest rates.





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Bitcoin

El Salvador to airdrop $30 in Bitcoin to every adult citizen

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The president of El Salvador  has announced the government will airdrop $30 worth of Bitcon (BTC) to every adult citizen of the country.

The announcement was welcomed by Bitcoiners, with influencers speculating El Salvador’s government wil need to purchase the required BTC it intends to distribute adding more than $100 million in buying pressure on markets.

Quickly googled estimates of the adult population of El Salvador varied, with onchain analyst Willy Woo tweeting that Bitcoin’s global user base will grow by 2.5% thanks to the influx of 4.5 million Salvadorians.

Others placed the Salvadoran adult population as high as 6.5 million (which is actually the total population), with Yahoo Finance anchor Zack Guzman using the figure for some rough back of the envelope calculations suggesting that $195 million worth of Bitcoin will be airdropped across the country.

Exact figures are hard to find but Statista shows that in 2019 the population aged 15 and above was 4.72M.

However, crypto Twitter’s euphoria may be be slightly premature, as local publication Prensa Latina notes El Salvador’s citizens will only receive the free Bitcoin after downloading the government-issued cryptocurrency wallet application.

The news was announced during a June 25 press conference, with President Bukele stating the government’s “wallet app will even work anywhere with a cell connection, and you won’t have to have a cell plan for the app.”

President Bukele also stated that the country’s much-celebrated Bitcoin law recognizing BTC as legal currency nationwide will come into effect on September 7.

Related: Opposition poses constitutional challenge to El Salvador’s Bitcoin law

El Salvador’s Bitcoin law was passed roughly two weeks ago. While the move has been praised by the global crypto community, the legislation has faced opposition from a minority political party and the World Bank.