According to the latest “Bitfinex Alpha” report, a balance between short-term holder (STH) demand and long-term holder (LTH) profit-taking currently influences Bitcoin’s potential rise to $100,000. As December progresses, this tussle between two competing forces is expected to bring price volatility in the market, the latest being Bitcoin closing at the historic monthly high of $96,506 at the end of November.
November’s Bitcoin Surge: A Prelude to December Volatility
Earlier in the week, Bitcoin saw an 8.64% drawdown, with the most recent fall to $90,911 on November 26—a decline larger than any since a pre-election sell-off that occurred in October. November did see some great things happen for Bitcoin; it is indeed the second-best month for Bitcoin activities with much gains at a phenomenal rise of 37.3%.
As per Bitfinex, this will continue till December, especially as far as the historical price trends in halving years go: they always end up suggesting the event will experience huge price growth.
The Role of Long-Term Holders in Bitcoin’s Market Sentiment
The balance between supply and demand determines the direction of Bitcoin’s price movement. According to the report by Bitfinex, long-term holders are actively distributing their holdings on increased demand from the marketplace. Approximately 508,990 BTC have been sold by LTH holders in the last two weeks since they peaked in supply in September. While this is indeed substantial, it is still below the 934,000 BTC sold during the rally that pushed Bitcoin to its all-time high of $73,666 in March.
As long-term holders continue to exert selling pressure, short-term holders continue to increase their balance. Currently, STH supply is nearly at the cycle high of 3,282,000 BTC, holding more than 3.25 million BTC in the hands of these investors. Usually, price surges of this significance for Bitcoin happen when STH supply exceeds pre-halving cycle highs, which indicates a high number of new players in the market.
How December’s Options Expiry Could Shape Bitcoin’s Price Action
Long-term holder behavior acts as a significant factor in market sentiment and price action. The Long Term Holder SOPR (Spent Output Profit Ratio) is sitting at 2.6. This ratio means that even though LTHs cash out some of their holdings for profit, it seems they’re not yet in the full-blown distribution phase, normally associated with SOPR levels above 3. Such highs would imply that the LTHs would be willing to sell for profitable prices but not necessarily at full point.
The continued selling by LTHs has added another layer of complication to the market dynamics. However, if such Bitcoin supply from STH can be absorbed, the coin will continue its upward trend. On the other hand, there is little demand in the scene or below pace with selling activities with that of LTH; the scenario is likely to result in increased volatility, with possible dips.
The December Outlook: Volatility Ahead
As we move into December, for traders and investors as several pressures have brought the forces of this peculiar month into play:
- Options Expiry: December is one of the biggest months in options expirations in the crypto space. Expiry dates create busy trading days and volatile prices as traders reposition their positions.
- Profit-Taking Pressure: Long-term holders have continued to distribute their holdings, leading to profit-taking pressure among other investors as well. This, in turn, would induce short-term price dips as market behavior would lead to reactions from traders.
- Market Sentiment: The general sentiment of the crypto market can tremendously affect prices. Good news or events on or around Bitcoin or more common trends in adoption will feed demand from STHs and thus serve to stabilize prices.
- Historical Trends: December gives mixed results in terms of price for Bitcoins; however, the strong November momentum, combined with the effects of a halving year, could in itself represent a critical mass for further growth.
Conclusion
To sum up, the final push for Bitcoin is quite depended on the demand from short-term holders while the long-term holders are busy taking their profits. As we move through December and with the kind of volatility expected because of options expirations and other market dynamics, traders and investors alike will need to watch the trend of supply and shifts to know the upcoming moves in Bitcoin.
If new demand sufficiently counterbalances the LTH distributions, then a bullish possibility may remain; however, one must be wary as Bitcoin’s price action remains very volatile.
