According to a recent report According to Bitfinex, breaking the psychologically important $100,000 barrier for Bitcoin (BTC) will largely depend on the actions of two cohorts of key holders: long-term holders (LTH) who engage in profit-taking and short-term holders (STH) who drive demand.
Demand from short-term holders is critical to pushing Bitcoin to $100,000
Bitcoin’s price rose an impressive 37.3% in November, closing the month at a record $96,506. However, for the flagship cryptocurrency to cross the $100,000 mark, the demand of STHs must be in line with the supply of LTHs.
Historically, December has been one of the most volatile months for Bitcoin. During the half-years, however, the month typically delivers strong performance, with an average return of 38.86%. Since the most recent halving took place in April 2024, analysts expect that December could be good for BTC holders.
The latest edition of the ‘Bitfinex Alpha’ report highlights several factors likely to propel Bitcoin past $100,000. The report notes that while short-term volatility may persist, the current bullish momentum in the cryptocurrency market suggests further gains are likely.
The report also points out that short-term price declines – as observed last week when BTC briefly fell to $90,911 – are often driven by ETF outflows and LTH profit-taking. Specifically, the report states the following:
Last week, ETFs recorded net outflows of $135.1 million, most of which occurred during the first two days of trading. LTHs have distributed a significant 508,990 BTC since September, increasing the supply in the market.
While the 508,990 BTC distributed by LTHs since September is notable, it remains lower than the 934,000 BTC distributed before the March 2024 highs. Nevertheless, continued demand from ETFs and retail buyers will prevent further price declines.
As seen in the chart above, STH supply is close to the cycle high of 3,282,000 BTC. Based on past data, the final phase of a bull run begins when STH supply rises past pre-halving cycle highs. The report reads:
This shift indicates increases retail participation, but also underlines the market’s dependence on inbound demand to absorb LTH profit-taking.
For the uninitiated, STH supply typically means the total amount of BTC currently held by wallets or entities that acquired it within a relatively short period of time, typically less than 155 days. Rather, the LTH offering refers to the BTC currently owned that was acquired more than 155 days ago.
Analysts are confident that $100,000 BTC is within reach
While the BTC price continues to hover around $90,000, several prominent analysts believe that $100,000 is just a minor hurdle in BTC’s upward price trajectory. Cryptoquant for example predicts that the top of BTC for this cycle could be $146,000.
The same applies to investment management company VanEck provides BTC is peaking at $180,000 during the current cycle. At the time of writing, BTC is trading at $95,238, down 1.2% in the past 24 hours.
Featured image from Unsplash.com, charts from Bitfinex, Glassnode and TradingView.com