in an investigation <a target="_blank" href="https://x.com/intangiblecoins/status/1861891792209097104″ target=”_blank” rel=”noopener nofollow”>note Titled “bitcoin's Path to $100,000: Breaking Down This Wall,” Alex Thorn, Head of Enterprise-Wide Research at Galaxy Digital, provides an analysis of bitcoin's recent performance and the factors influencing its path to the top. $100,000 milestone.
bitcoin has not traded below $90,000 over the past week, fueling anticipation that it will soon surpass the $100,000 mark. The price of btc has increased by up to 50% since November 4, the day before the US elections. After reaching new all-time highs of $99,860 on Friday, November 24, BTCUSD retreated as much as 8% to $91,420.
“In previous bitcoin times, this drawdown would not have raised eyebrows, as sharp corrections were extremely common,” Thorn noted. “Today, however, all eyes are on bitcoin, including many who haven't been in the trenches of bitcoin volatility for years.”
Thorn emphasized that corrections are a healthy part of market cycles. He commented that “bull markets scale a 'wall of worry'.” The period between March 14, 2024, when BTCUSD reached $73,835, and November 6, 2024, saw bitcoin in a descending range for 237 days. This formed “one of the largest and longest-lasting bull flags” Thorn had ever seen.
Historical data shows that bitcoin bear markets have been severe, with previous cycles in 2012, 2015-2016, and 2019 in which btc traded more than 80% below its previous all-time highs. In March 2020 and late 2022/early 2023, bitcoin fell to 75% of its previous highs. However, the recent 8% drop over the past week is relatively minor compared to the volatility seen during the 237-day descending channel between March and November 2024.
Who sells bitcoin now?
By analyzing the on-chain data, Thorn explored the current selling pressure and supply distribution. The supply of long-term holders (LTH), those who have not moved their coins for 155 days or more, has been decreasing as BTCUSD rose after the election. This drop is steeper than during the profit-taking that limited the run to all-time highs in March. However, Coin Days Destroyed (CDD), a metric that indicates the movement of older coins, is not increasing significantly. This suggests that very old coins are not moving up the chain in substantial volumes as observed during previous market highs.
“If the supply of 'long-term holders' is decreasing but very old coins are not moving, who moves and sells coins?” —Thorn questioned. He explained that the selling pressure appears to come primarily from recent LTH supply: those who acquired bitcoin during the 237 days of market consolidation between March and November 2024. The UTXO Realized Price Distribution (URPD) metric shows significant ownership of the coins last moved between $52,000 and $72,000, indicating that these holders are making profits as bitcoin approaches the $100,000.
In the options market, open interest for new options on spot bitcoin ETFs amounts to more than $4.1 billion in notional value, with the majority ($3.1 billion) being purchased on sight. Most of the call option exposure is at strike prices of $93,000 or higher, which Thorn interprets as a bullish signal. “Market participants are optimistic and are positioning themselves for further gains,” he said. crypto-native traders have a net short gamma of $93,000, meaning they need to hedge by buying when prices rise and selling when prices fall, potentially amplifying market volatility until BTCUSD reaches $106,000.
As for leverage in the system, Thorn noted that, while it exists, it appears healthy rather than excessive. Perpetual swap funding rates are nowhere near the elevated levels seen in March 2024 or during previous market peaks. The three-month annualized base is rising following the post-election price movement, but remains well below the levels associated with market highs. Open interest is at all-time highs, but a significant portion is attributed to the Chicago Mercantile Exchange (CME), likely related to ETF owners engaging in basing or hedging trading by authorized ETF participants.
Thorn expressed confidence that the bitcoin bull market has “legs,” citing a combination of growing institutional, corporate and potentially nation-state adoption, as well as favorable regulatory and political developments. He highlighted several factors that could drive bitcoin higher in the short and medium term.
Catalysts That Will Drive bitcoin Above $100,000
First, easing regulatory hurdles, including potential changes to the SEC's Staff Accounting Bulletin 121 (SAB 121), could pave the way for major custodian banks to enter the crypto space. “Given that we are very likely to see a material change in the OCC's stance toward banks that interact directly with cryptocurrencies, these large banks will eventually have the opportunity to become more involved,” Thorn predicted.
Second, a relaxation of the SEC's application of the Howey test to digital assets, or the expansion of tradable “cryptoasset securities” among broker-dealers, could allow more participants to enter the exchange space. , including traditional financial institutions. This could also lead to the approval of more spot crypto ETFs in the United States.
Further institutionalization of the bitcoin and cryptocurrency market could increase funding options, improve liquidity, and make spot cryptocurrencies more accessible through existing institutional trading platforms. This would increase the maturity level of the institutional crypto market and potentially revolutionize aspects of finance by merging traditional finance and decentralized finance. “Depending on the regulatory stance and any legislation that is enacted, the merger of TradFi and DeFi may finally be upon us,” Thorn suggested.
On the political front, Thorn highlighted the pro-bitcoin stance of the incoming US administration. Scott Bessent, a well-known bitcoin and cryptocurrency advocate, has been elected as the 79th Secretary of the Treasury. Vice President-elect JD Vance owns bitcoin, as do Elon Musk and Vivek Ramaswamy, who will lead the new Department of Government Efficiency. Commerce Secretary candidate Howard Lutnick owns significant amounts of bitcoin, and his company, Cantor Fitzgerald, is deeply involved in the btc and stablecoin markets.
Fox Business reported that Trump's transition team is planning for the Commodity Futures Trading Commission (CFTC) to take the lead role in regulating digital assets, instead of the Securities and Exchange Commission (SEC). Industry observers consider this measure to be favorable. “This marks the latest in a series of pro-bitcoin cabinet officials,” Thorn noted.
Thorn mentioned the intensifying debate around a possible US strategic bitcoin reserve, suggesting that other nations could try to get ahead of the United States with more permissive policies on digital assets or establishing their own reserves. Morocco, for example, has begun preparing new legislation to legalize cryptocurrencies after banning them in 2017.
Upcoming events like bitcoin MENA in Abu Dhabi on December 9 and 10 could include major adoption announcements. The introduction of spot ETF options could contribute to greater liquidity and potentially reduce volatility, making it easier for large institutions to enter the asset class and possibly spurring interest among US retail investors, who account for 44% of options of retail stocks.
In conclusion, Thorn believes that the btc price setup over the next 12 to 24 months is unique and bullish. “All of this is to say that bitcoin's setup over the next 12 to 24 months looks unique and bullish,” he said. “We believe that bitcoin can find a strong support base and could make another attempt to break through the $100,000 level (the sell wall!) in the near term.”
At the time of this publication, btc was trading at $94,947.
Featured image created with DALL.E, chart from TradingView.com
