When Will Bitcoin Break The Sell Wall At $100,000? Galaxy Exec Answers

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As a seasoned investor and technology enthusiast with over two decades of experience under my belt, I find the current state of the Bitcoin market to be nothing short of exhilarating. The potential for growth and transformation that this digital asset presents is reminiscent of the early days of the internet – a time when I witnessed firsthand how a seemingly abstract concept could revolutionize our world.

In a research paper called “Bitcoin‘s Journey to $100K – Breaking Down This Barrier,” Alex Thorn, who is in charge of all research at Galaxy Digital, offers an examination of Bitcoin’s recent trends and the elements affecting its movement towards reaching $100,000.

For the past week, Bitcoin has maintained its value above $90,000, sparking excitement that it may soon break through the $100,000 barrier. The price of BTC increased significantly by up to 50% since November 4, which was the day before the US election. After hitting record highs of $99,860 on November 24, Bitcoin temporarily dropped as much as 8% to $91,420.

Back in the early days of Bitcoin, steep declines like this wouldn’t have caused much surprise, given how frequent such corrections were. Nowadays, though, there’s a lot more attention focused on Bitcoin, with many newcomers who haven’t experienced its volatility for some time. (Thorn observed)

As an analyst, I underscored that corrections are indeed a crucial aspect of market cycles, serving as a natural process. I pointed out that Bitcoin, much like a determined climber, scales what I refer to as the “wall of worry” during a bull market. From March 14, 2024, when BTCUSD peaked at $73,835, up until November 6, 2024, we witnessed Bitcoin in a prolonged downward trend for approximately 237 days. This prolonged period of relative stability formed one of the largest and longest-standing bull flags I’ve encountered in my analysis.

Based on past trends, Bitcoin’s market corrections have been substantial, as indicated by its decline of more than 80% from previous record highs in periods like 2012, 2015-2016, and 2019. The drops seen in March 2020 and the end of 2022/beginning of 2023 brought Bitcoin down to approximately 75% of its previous peak values. However, the recent 8% drop over the last week is relatively modest when compared to the volatility experienced during the 237-day downtrend between March and November 2024.

Who Is Selling Bitcoin Now?

As an analyst, I’ve been delving into on-chain data to assess the current selling pressure and supply distribution. Notably, the hoard held by long-term holders (those who haven’t transacted their coins for 155 days or more) has been dwindling as BTCUSD surges following the election. This decline is more pronounced compared to the profit-taking that marked the run to record highs in March. However, the Coin Days Destroyed (CDD), a metric that signals the movement of older coins, isn’t spiking noticeably. This hints at a lack of significant on-chain movement of very old coins, a phenomenon typically seen during previous market peaks.

Thorn pondered, “If the number of long-term holders reducing their supply is noticeable yet old coins remain stationary, who seems to be selling Bitcoins?” His analysis suggested that the selling pressure largely originates from the recent long-term holder group – those who purchased Bitcoin during the 237 days of market stabilization between March and November 2024. The UTXO Realized Price Distribution (URPD) graph reveals a substantial number of coins were last activated when Bitcoin was priced between $52,000 and $72,000, suggesting these holders are cashing out as Bitcoin nears $100,000.

In the Bitcoin ETF options market, over $4.1 billion worth of new options for spot-based Bitcoin ETFs have been traded, with approximately $3.1 billion invested in call options. The majority of these call options are set at prices above $93,000 per Bitcoin, which suggests a positive outlook on the market. Thorn explains that this trend implies investors expect further price increases. He stated, “Market participants are optimistic and preparing for continued growth.” Interestingly, crypto-focused dealers currently have a negative gamma position at $93,000, meaning they must hedge by purchasing as prices increase and selling when prices decrease. This could potentially lead to increased market volatility until the price of Bitcoin reaches around $106,000.

In terms of system leverage, Thorn noted that it generally seems more balanced than excessive. The funding rates for perpetual swaps haven’t reached the highs seen in March 2024 or past market peaks. The three-month annualized basis is rising after the post-election price shift, but it’s still far from levels typically associated with market peaks. Open interest is at record highs, though a large chunk of it can be linked to the Chicago Mercantile Exchange (CME), possibly due to ETF owners engaging in basis trades or ETF authorized participants hedging their positions.

As a crypto investor myself, I wholeheartedly believe that the Bitcoin bull market has strong foundations, or rather, “legs.” This conviction stems from a multifaceted perspective: an upsurge in institutional, corporate, and potentially national adoption; coupled with favorable regulatory and policy advancements. These elements could catapult Bitcoin’s value even higher in the short and medium term.

Catalysts That Will Bitcoin Propel Above $100,000

Initially, relaxing regulatory restrictions, possibly involving modifications to the SEC’s Staff Accounting Bulletin 121 (SAB 121), might open up crypto space for large custodian banks. As we anticipate a significant change in the OCC’s stance towards banks dealing directly with cryptocurrencies, these prominent banks are expected to eventually increase their involvement in this sector, according to Thorn’s prediction.

As a crypto investor, I eagerly anticipate potential changes in the SEC’s interpretation of the Howey Test regarding digital assets and the broadening of “crypto asset securities” that can be traded through broker-dealers. Such adjustments could pave the way for an influx of new players in the exchange market, including traditional financial institutions. Furthermore, these modifications might expedite the approval process for more spot-based crypto Exchange Traded Funds (ETFs) within the United States.

As Bitcoin and cryptocurrencies become more integrated into institutional trading platforms, it could lead to a greater variety of financing options, improved liquidity, and easier access to spot crypto trading for institutions. This development would elevate the sophistication level of the institutional crypto market and, potentially, transform finance by blending traditional finance (TradFi) and decentralized finance (DeFi). Provided that regulations are favorable and any necessary legislation is passed, the long-awaited fusion of TradFi and DeFi could become a reality.

As an analyst, I’m excited to share insights about the political landscape from a Bitcoin perspective. The incoming U.S. administration appears to be leaning toward a pro-Bitcoin stance, which is a significant development for the crypto community. Scott Bessent, a well-known Bitcoin and cryptocurrency advocate, has been appointed as the 79th Treasury Secretary. This appointment underscores the administration’s support for digital assets.

According to Fox Business, it’s being suggested that the Trump administration’s transition team wants the Commodity Futures Trading Commission (CFTC) to be responsible for regulating digital assets, instead of the Securities and Exchange Commission (SEC). Industry experts view this as a positive development. Thorn commented, “This is another sign of Bitcoin-friendly figures in the administration.

Thorn brought up the escalating debate regarding a possible US strategic Bitcoin reserve, implying that other countries could take advantage of less restrictive U.S. policies on digital currencies or even create their own reserves ahead of time. For instance, Morocco is planning new laws to legalize cryptocurrency, having previously outlawed it in 2017.

Forthcoming events like Bitcoin MENA in Abu Dhabi on December 9-10 might showcase major adoption announcements. The availability of spot ETF options could enhance liquidity and potentially decrease volatility, making it more accessible for large institutions to invest in this asset class, which may stimulate curiosity among US retail investors, who constitute about 44% of retail equity options holders.

To summarize, Thorn is convinced that the conditions for Bitcoin’s price over the next 12 to 24 months are rare and indicative of a bullish trend. Put simply, he thinks Bitcoin might establish a solid foundation and potentially revisit the $100k mark (the significant resistance level) in the short term.

At press time, BTC traded at $94,947.

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2024-11-28 19:42