In search Note Titled “Bitcoin’s Path to $100,000 – Tear Down That Wall,” Alex Thorne, Head of Corporate Research at Galaxy Digital, provides an analysis of Bitcoin’s recent performance and the factors influencing its path toward the $100,000 goal.
Bitcoin has not traded below $90,000 over the past week, sparking expectations that it will soon surpass the $100,000 mark. The price of Bitcoin has risen by up to 50% since November 4, the day before the US elections. After reaching an all-time high of $99,860 on Friday, November 24, Bitcoin fell against the dollar by as much as 8% to $91,420.
“In earlier Bitcoin times, such a pullback would not have been surprising, as sharp corrections were very common,” Thorne noted. “However, these days, all eyes are on Bitcoin, including many people who have not been in the trenches of Bitcoin volatility for years.”
Thorne stressed that corrections are a healthy part of market cycles. He noted that bull markets are climbing a “wall of anxiety.” The period between March 14, 2024, when BTCUSD reached $73,835, and November 6, 2024, saw Bitcoin in a bearish range for 237 days. This constituted “one of the largest and longest… “The most bull flags Thorn has ever seen.”
Historical data shows that Bitcoin bear markets have been severe, with previous cycles in 2012, 2015-2016, and 2019 seeing Bitcoin trading more than 80% below its previous all-time highs. The March 2020, late 2022 and early 2023 periods saw Bitcoin fall to 75% from its previous highs. However, the recent 8% decline over the past week is relatively minor compared to the fluctuations observed during the 237-day downward channel between March and November 2024.
Who is selling Bitcoin now?
By analyzing on-chain data, Thorne explored the current selling pressure and supply distribution. The supply held by long-term holders (LTH) — those who haven’t moved their coins for 155 days or more — fell as Bitcoin rose against the dollar (BTCUSD) after the election. This decline is more pronounced than during the profit-taking that drove the rally to all-time highs in March. However, Coin Destroyed Days (CDD), a measure that indicates the movement of older currencies, is not rising significantly. This indicates that very old coins are not moving up the chain in the large volumes seen during previous market tops.
“If the ‘long holder’ supply is decreasing but very old coins are not moving, who moves the coins and sells them?” Thorne asked. He explained that the selling pressure appears to be mainly coming from the recent LTH supply – those who acquired Bitcoin within the 237 days of market consolidation between March and November 2024. The UTXO Realized Price Distribution (URPD) measure shows significant ownership of coins that were last transferred between March and November. 2024. $52,000 and $72,000, suggesting that these coin holders are taking profits as Bitcoin approaches $100,000.
In the options market, total open interest for new options on spot Bitcoin ETFs is more than $4.1 billion in notional value, with the majority ($3.1 billion) of that at call. Most of the call exposure is at $93,000 or higher, which Thorne interprets as a bullish signal. He added: “Market participants are optimistic and preparing for further rise.” The original cryptocurrency traders have a net worth of $93,000, which means they need to hedge by buying as prices rise and selling as prices fall, potentially amplifying market volatility until BTCUSD reaches $106,000.
Regarding the leverage in the system, Thorne noted that although leverage exists, it mostly appears healthy and not excessive. Perpetual swap funding rates are nowhere near the highs seen in March 2024 or during previous market tops. The three-month annualized basis is increasing following post-election price action but remains well below levels associated with market peaks. Open interest is at an all-time high, but much of it is attributable to the Chicago Mercantile Exchange (CME), which is likely tied to ETF holders who engage in underlying trades or hedging by authorized ETF participants.
Thorne expressed confidence that Bitcoin’s bull market has “legs,” citing a combination of growing adoption by institutions, corporations and perhaps nation-states, as well as favorable regulatory and policy developments. He highlighted several factors that could push Bitcoin higher in the near and medium term.
The catalysts that will push Bitcoin above $100,000
First, easing regulatory headwinds, including potential changes to the SEC’s Staff Accounting Bulletin No. 121 (SAB 121), could pave the way for larger custodial banks to enter the cryptocurrency space. “Given that it is very likely that we will see a fundamental shift in the OCC’s stance toward banks that directly interact with cryptocurrencies, these large banks will eventually have their opportunity to participate more,” Thorne predicted.
Second, relaxing the SEC’s application of the Howey Test to digital assets, or expanding tradable “crypto-asset securities” within broker-dealers, could allow more entrants into the exchange space, including traditional financial institutions. This could also lead to more spot cryptocurrency ETFs being approved in the US.
Further institutionalization of the Bitcoin and cryptocurrency market could increase funding options, enhance liquidity, and make spot cryptocurrencies more accessible through existing institutional trading platforms. This would raise the level of maturity of the institutional cryptocurrency market and potentially revolutionize aspects of finance by merging traditional finance and decentralized finance. “Depending on the regulatory situation and any legislation enacted, a merger of TradFi and DeFi may eventually be upon us,” Thorne suggested.
On the political front, Thorne highlighted the pro-Bitcoin stance of the incoming US administration. Scott Besent, a well-known advocate for Bitcoin and cryptocurrencies, has been selected as the 79th Secretary of the Treasury. Vice President-elect J.D. Vance owns bitcoin, as do Elon Musk and Vivek Ramaswamy, who will lead the new Department of Government Efficiency. Commerce Secretary nominee Howard Lutnick owns large amounts of Bitcoin, and his company, Cantor Fitzgerald, is deeply involved in the Bitcoin and stablecoin markets.
Fox Business reported that Trump’s transition team plans to have the Commodity Futures Trading Commission (CFTC) take over the lead role in regulating digital assets, rather than the Securities and Exchange Commission (SEC). Industry observers consider this move favorable. “This represents the latest in a group of pro-Bitcoin government officials,” Thorne noted.
Thorne mentioned the intense debate over a potential strategic reserve of bitcoin in the United States, suggesting that other countries may seek to pre-empt the United States with more lenient policies on digital assets or by creating their own reserves. For example, Morocco has begun preparing new legislation to legalize cryptocurrencies after banning them in 2017.
Upcoming events such as the Bitcoin MENA in Abu Dhabi on December 9 and 10 could include major announcements about its adoption. The introduction of spot ETF options could increase liquidity and potentially reduce volatility, making it easier for large institutions to enter the asset class and potentially stimulating interest among US retail investors, who account for 44% of retail stock options.
In conclusion, Thorne believes that Bitcoin’s price setup over the next 12 to 24 months is unique and bullish. “All of this means that Bitcoin’s setup over the next 12 to 24 months looks unique and bullish,” he asserted. “We believe that Bitcoin may find a strong support base and could make another attempt to cross the $100,000 level (sell wall!) in the near term.”
At press time, Bitcoin was trading at $94,947.
Featured image created with DALL.E, a chart from TradingView.com
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