As a seasoned researcher with years of experience in the cryptocurrency market, I’ve witnessed the highs and lows, the boom and bust cycles. But this current uptrend of Bitcoin above $100,000 is truly something extraordinary.
The surge in Bitcoin’s (BTC) price beyond $100,000 has occurred at a time when there’s been a significant decrease in the amount of Bitcoin held by long-term investors. This indicates that these experienced Bitcoin holders are cashing out their substantial profits as the BTC price nears the six-figure mark.
Realized profits for Bitcoin longs hit record highs
The chart below shows entities that hold Bitcoin for more than 155 days as long-term holders (LTH). Their behavior can often reflect a shift in market sentiment.
Currently, as of December 19th, the long-term holders (LTH) of Bitcoin have reduced their supply to approximately $13.31 billion, a decrease from its previous local high of about $14.23 billion two months ago, based on data provided by Glassnode.
Over the specified timeframe, Bitcoin’s value climbed from approximately $58,000 to more than $100,000, suggesting that Long-Term Holders (LTHs) may have offloaded their assets near peak prices.
Bitcoin uptrend above $100,000 is far from being exhausted
Short-term investors are entering the market to counteract the selling pressure initiated by long-term investors in Bitcoin.
Significantly, the decrease in LTH’s supply has occurred alongside an increase in the amount of Bitcoin owned by Long-Term Holders (STHs). It is probable that these holders’ capacity to counteract selling pressure has been crucial in maintaining Bitcoin’s price surge above $100,000.
According to Glassnode analysts UkuriaOC and CryptoVizArt in their recent report, they pointed out that the percentage of wealth controlled by these new investors has not surpassed the levels seen at the peaks of previous all-time high (ATH) cycles.
“The interpretation here is that the market may not have reached the level of euphoric fervor, and saturation by speculators seen in prior cycles.”
Another useful metric to assess the state of the market is the True Market Deviation (AVIV Ratio), which measures the average unrealized profit— or paper gains—held by active investors.
As a crypto investor, I use this ratio to gauge whether the market is reaching its limits or if there’s potential for further growth. It helps me decide if it’s time to take profits or hold on for more gains.
historically, bull markets usually reach their highest point when most types of investors have made significant returns. This situation frequently leads to a surge in selling activity, as investors cash out their profits and potential buyers hold back from entering the market at high prices.
As an analyst, I’ve observed that when the AVIV Ratio exceeds three standard deviations (σ), it typically indicates overheated conditions in the market. However, on December 19, this ratio stood at 1.81, significantly lower than the +3σ extreme band of 2.3, suggesting a cooler market condition compared to what’s usually considered overheated.
It implies that although profits are increasing, the market hasn’t quite hit the point of excessive enthusiasm yet. This means Bitcoin might still ascend further before profit-making and decreased interest lead to a genuine market reversal.
Bitfinex says Bitcoin price drop will be mild
As a researcher studying the cryptocurrency market, I am optimistic about Bitcoin’s future price movements. According to analysts at Bitfinex exchange, institutional demand is expected to increase significantly in the coming months, which could drive the Bitcoin price to $145,000 by mid-2025. In a best-case scenario, this growth might even push the price up to $200,000.
Currently, as of December 19th, Bitcoin exchange-traded funds (ETFs) are handling approximately $37 billion in assets. This is an increase from the $24.23 billion they were managing at the beginning of November, based on the data provided by Farside Investors.
As talk grows in the crypto world, there’s speculation that the upcoming Trump administration might consider creating a strategic Bitcoin reserve for the U.S., potentially driving the price to reach an astounding $800,000 by 2025.
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2024-12-19 21:38