Bitcoin’s journey to a potential $100,000 milestone hinges on the interplay between demand from short-term holders (STHs) and profit-taking by long-term holders (LTHs), according to the latest Bitfinex Alpha report.
Recent Price Movements: Recovery and Momentum
Despite an 8.64% intra-week decline in late November, Bitcoin achieved a record monthly close of $96,506, reflecting its resilience. This recovery followed a dip to $90,911 on November 26, the most significant drop since October’s pre-election sell-off. Notably, Bitcoin ended November with a 37.3% gain, marking its second-best monthly performance of 2024.
Heading into December, Bitcoin’s upward momentum is viewed as a strong indicator for continued growth. Historically, Bitcoin prices in halving years experience average gains of 38.86%, though the report cautions that December could bring heightened volatility due to the year’s largest options expiry.
Supply and Demand Trends Shape Market Outlook
Medium-Term Optimism with Short-Term Risks
While the medium-term outlook for Bitcoin remains bullish, short-term risks persist. The report underscores the ongoing distribution of Bitcoin by LTHs as a critical factor impacting prices. Over the past two weeks, LTHs have distributed approximately 508,990 BTC, responding to increased market demand. Since September, LTHs have reduced their holdings significantly, though this is less than the 934,000 BTC sold during March’s rally to $73,666.
Short-Term Holders at a Crucial Juncture
Short-term holder supply has reached 3.25 million BTC, nearing its cycle high of 3.28 million BTC. Historically, Bitcoin’s bull markets accelerate when STH supply surpasses pre-halving cycle highs. If STH demand aligns with or exceeds LTH distribution, Bitcoin’s price could maintain upward momentum.
The Long-Term Holder SOPR (Spent Output Profit Ratio), which tracks the profit margin at which LTHs sell, stands at 2.6. Market tops typically occur when this ratio exceeds 3, suggesting further room for growth if STH demand sustains.
December Outlook: Volatility and Opportunity
Bitcoin’s strong momentum from November, coupled with halving-year effects, could support a neutral-to-positive performance in December. However, the report anticipates increased volatility later in the month due to options expirations and potential profit-taking.
Key Factors to Monitor
- LTH Distribution: Continued distribution by LTHs poses a risk of short-term price fluctuations.
- STH Demand: Sufficient STH demand could offset LTH selling pressure, paving the way for Bitcoin to approach $100,000.
If the market can absorb the supply from LTHs, Bitcoin’s upward trajectory is likely to continue. However, without robust STH demand, further volatility and pullbacks may precede any significant price gains.
Conclusion: A Balancing Act
The path to $100,000 remains possible if demand dynamics favor STHs over LTHs. Yet, vigilance is crucial as volatility and supply-demand trends will shape Bitcoin’s price action in December. For traders and investors, the coming weeks will require careful observation of market conditions to capitalize on potential opportunities.
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