December has traditionally been a volatile and unpredictable month for bitcoin (BTC). However, analysts at the crypto exchange Bitfinex suggest that while a short-term pullback may occur, changes in network dynamics could propel the digital asset beyond $100,000.
A recent weekly report suggests that the crypto asset could sustain its upward momentum this month and potentially surge past $100,000 if short-term holders’ (STH) demand aligns with the supply from long-term holders’ (LTH) supply. Currently, BTC is trading at over $95,300 after fluctuating within the $90,000 to $98,000 range over the past week.
Can STH Demand Match LTH Supply?
Long-term Bitcoin holders are seizing the opportunity to distribute their reserves on a large scale amid rising market demand. The recent rally has been fueled by increased interest from institutional investors and growing momentum in the spot Bitcoin exchange-traded fund (ETF) market.
LTHs saw their supply peak in September, after which they distributed approximately 508,990 BTC. While substantial, this amount is notably less than the 934,000 BTC offloaded during the March rally that propelled Bitcoin to its peak of $73,666, according to Bitfinex.
Over the past eight months, LTHs have been steadily re-accumulating bitcoin after offloading their holdings ahead of the halving. However, as this group transitions back to a redistribution phase, STHs have been actively buying and accumulating rapidly. The exchange’s analysis indicates that a decline in the supply held by LTHs is typical at this stage of the bull cycle.
BTC Depends on ETF Inflows and Strong Demand
As LTHs continue to realize profits, BTC relies on positive ETF inflows and robust demand from marginal buyers to sustain its upward momentum. Over the past two weeks, the consistent supply from LTHs has entered the market. Without strong spot demand to absorb this influx, the digital asset risks facing a sharp price correction.
The final phase of the bull market typically begins when the STH supply surpasses the pre-halving cycle peak of 3,282,000 BTC. This supply currently stands at 3,252,000 BTC, signaling that the threshold is close to reaching.
