Bitcoin’s (BTC) journey to a potential $100,000 price point will depend on the balance between short-term holder (STH) demand and long-term holder (LTH) profit-taking, according to the latest edition of the “Bitfinex Alpha” Reportage.
Despite a sharp 8.64% intra-week pullback over the past few days, Bitcoin’s price surged to a record monthly close of $96,506 by the end of November.
Bitcoin’s recovery began after the currency fell as low as $90,911 in November. It was the steepest decline since October before elections. Although there was a brief drop in November, Bitcoin still gained 37.3%. This is the second best monthly performance for the year.
Bitcoin’s strong momentum heading into December is seen as a positive signal. The report forecasted a continuation of the upward trend, particularly given BTC’s historical performance during halving years.
Bitcoin has seen an increase in price of up to 38.86% on average during the half-years. The report suggests, however, that there may be increased volatility in December, particularly as this coincides with one of the biggest options expirations for the year.
Recent Bitcoin demand and supply trends indicate that there could be a short-term pullback in the market before it reaches new heights.
Supplies Trends
The medium-term outlook remains positive, but concerns persist about a possible short-term decline. Report highlighted that the continued distribution of Bitcoin by long-term investors (LTHs), was a key factor in determining price.
LTHs began distributing their assets in large quantities again over the last two week. Since September’s peak of LTH supplies, around 508,990 BTC have been distributed.
While substantial, this distribution is smaller than the 934,00 BTC that were sold in the rally to reach the high of March, $73,666. It remains an important factor for the short term outlook.
Bitcoin may experience more volatility in price and further pullbacks if demand from STHs and marginal buyers is not matched by the amount of supply that LTHs are dumping.
STH is close to its previous cycle high, 3,282,000 BTC. Short-term investors hold just over 3 million BTC. Historically, the final leg of Bitcoin’s bull market is triggered when STH supply surpasses pre-halving cycle highs.
Bitcoin’s price could continue to rise if STHs can match or even exceed LTHs. The long-term holders SOPR (SpentOutputProfit Ratio), or the ratio of profit at which LTHs are able to sell their Bitcoins, is currently at 2.6.
Market tops are often seen when SOPR exceeds 3, which indicates a greater profit taking phase. While LTHs continue to sell, their distribution has not yet reached its peak. This leaves room for more upward movement, if STHs demand continues to be strong.
Forecast for December
If the LTHs can be absorbed by the market, then the road to $100,000 is more probable. The report noted that while typically volatile, Bitcoin’s performance in December could remain neutral to positive due to the strong momentum from November, combined with the halving-year effects that often boost Bitcoin’s price.
However, the volatility expected in the latter part of the month — due to options expiring and the potential for profit-taking — could create short-term price fluctuations.
The report cautioned that traders and investors must remain vigilant in the coming weeks, monitoring both the supply trends and the demand from short-term holders to gauge Bitcoin’s next move.
In the short-term, Bitcoin’s key scenario is if enough demand enters the market to sustain the continuing upward momentum. If the balance tips favor short-term holders, the $100,000 threshold may not be far off — but until then, volatility will likely remain a fixture in Bitcoin’s price action.
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