A Pause Before the Next Ascent?

With Bitcoin just approaching the $100,000 milestone, are profit seekers controlling the market, or is this setting up for another big rally?

BTC is cooling down

Bitcoin (BTC) has had an exciting rise lately, but it looks like the party is taking a break. After coming tantalizingly close to the $100,000 level, the world’s largest cryptocurrency by market cap is calming down.

As of November 26, Bitcoin is trading around $94,300, down 3% in the last 24 hours. This pullback comes after BTC reached its all-time high of $99,655 on November 22.

BTC 6-month price chart | Source: crypto.news

The recent price action looks like a classic take-profit situation. This selling pressure was initially eased by strong demand from spot Bitcoin ETFs on a five-day net inflow streak.

However, according to CoinGlass data, on November 25, this trend was reversed and an outflow of $ 435 million was seen from ETFs.

However, when we zoom out, we see that Bitcoin’s overall sentiment is still bullish. BTC is up more than 30% since the US presidential election on November 5, when Donald Trump made an unexpected return to the political scene.

Meanwhile, the prospect of policy changes, especially with the looming resignation of SEC Chairman Gary Gensler, who will step down on January 20, 2025, has fueled the narrative that cryptocurrency may finally find itself on friendlier regulatory ground.

So where does Bitcoin go from here? Has he already reached the top, or is this just a pause before another climb? Let’s find out.

What’s really going on with Bitcoin?

While Bitcoin has weathered the current correction, the broader narrative surrounding BTC remains intricately tied to one of its most vocal champions, MicroStrategy.

The software-turned-Bitcoin investment firm led by Michael Saylor has once again made headlines with its massive purchase of 55,500 BTC between November 18 and November 24.

MicroStrategy purchased 55,500 BTC at ~$97,862 for ~$5.4B. #bitcoin and achieved a BTC Return of 35.2% QTD and 59.3% YTD. As of 24.11.2024, we have 386,700 units in stock $BTC It was purchased for ~$21.9 billion at ~$56,761 per Bitcoin. $MSTR https://t.co/79ExzXk4UM

— Michael Saylor⚡️ (@saylor) 25 November 2024

The $5.4 billion purchase, at an average price of $97,862 per Bitcoin, represents MicroStrategy’s largest single-week acquisition to date. With this latest craze, the company currently holds approximately 386,700 BTC, which were purchased at an average price of $56,761 per token.

MicroStrategy has announced purchases of Bitcoin on three consecutive Mondays since Donald Trump’s re-election, collecting $11.43 billion worth of BTC in November alone.

Such aggressive accumulation adds to growing institutional confidence in Bitcoin as a long-term asset and is supported by expectations of a crypto-friendly regulatory environment under new management.

But in the short term, these high-profile purchases add volatility to an already volatile market. On November 25, Bitcoin rose to highs of $98,000, but speculative traders reacted quickly after the purchase price of $97,862 was announced. BTC fell to $92,240 within hours, triggering sharp liquidations in derivatives markets.

According to CoinGlass data, as of November 26, more than $149 million in BTC futures contracts were deleted in the last 24 hours, and the bulls bore the brunt of it. $113 million in long positions and $35 million in short positions were liquidated.

Retail traders tend to interpret institutional purchase prices as market references and often base their bids closer to these levels. When this occurs during a period of increased leverage in the market, even small corrections can have a snowball effect, leading to sharper selling and liquidation cascades.

Despite this short-term turmoil, the long-term outlook remains optimistic. With more than 134,000 BTC withdrawn from the market in November alone, the firm is essentially locking up liquidity, leaving fewer Bitcoins to meet future demand.

Over time, this could increase price momentum during the next surge in buying interest.

Experts shed light on BTC’s path

Bitcoin’s recent pullback may be troubling, but experts in the crypto space are calling for calm, and for good reason.

Leading on-chain analytics platform Santiment recently shed light on an important trend: the behavior of large Bitcoin holders.

🐳 Is it time to panic after Bitcoin opened the week with a slight pullback below $95,000? Whales and sharks certainly don’t think so. In November alone, an additional 63,922 coins (worth $6.06 billion) were deposited in wallets containing at least 10 BTC. As long as they keep moving… pic.twitter.com/6EVS9UtFtm

— Santiment (@santimentfeed) 25 November 2024

Even though Bitcoin’s price has fallen below $95,000 this week, wallets holding at least 10 BTC have been on an accumulation spree, with 63,922 bitcoins worth approximately $6.06 billion added in November alone.

As Santiment notes, “any decline may be short-lived” as long as these wallets continue to increase their holdings.

Meanwhile, CryptoQuant CEO Ki Young Ju noted that steep corrections of up to 30% were common even during the explosive bull run in 2021.

Even in a parabolic bull run, #Bitcoin We could see a -30% pullback.

Such corrections occurred repeatedly from 17K to 64K during 2021 price discovery.

This is not a call for correction; Just manage your risk and avoid panic selling at local bottoms. We are in a bull market. pic.twitter.com/B5zpk7P0N9

— Ki Young Ju (@ki_young_ju) 26 November 2024

He explains that these pullbacks are a natural part of the price discovery process that took Bitcoin from $17,000 to $64,000 in just a few months. As Ju puts it, “We are in a bull market.”

Adding to this bullish sentiment is crypto analyst Michaël van de Poppe, who points out a key difference between this cycle and past cycles: the sharp decline in Bitcoin reserves held on exchanges.

This is a huge difference from previous cycles.

amount $BTC Stock markets have fallen significantly and continue to fall.

With the addition of large amounts of liquidity, a supply shock is looming.

We will go much higher this cycle than we all expected. pic.twitter.com/m5gCMA5isd

— Michaël van de Poppe (@CryptoMichNL) 25 November 2024

This decline means that more investors are moving their BTC into long-term storage, effectively decreasing the supply available for trading. Van de Poppe sees this as a harbinger of a “supply shock,” especially as more liquidity flows into the market.

As demand exceeds supply, the environment may be set for Bitcoin to exceed expectations. As he predicted, “This cycle, we’re going to go much higher than any of us expected.”

What to expect next?

The focus for Bitcoin continues to be investor behavior and macroeconomic triggers. Whales and long-term holders are steadily depleting the available supply, while short-term volatility continues as speculative traders readjust their positions.

The market appears to be walking a fine line between two scenarios: a consolidation phase in the $90,000-$95,000 range or a sharper pullback testing the $85,000 level due to liquidity pressures and derivative positioning.

Despite this, key indicators such as the contraction of foreign exchange reserves and stable accumulation indicate that any decline is likely to be met with strong buying interest.

This dynamic sets the stage for a potential recovery if demand picks up, especially as the holiday season often triggers increased retail investor activity.

However, altcoin investors need to proceed with caution; While a decline in Bitcoin dominance could signal opportunities for altcoins, a sharp Bitcoin correction like we are currently witnessing could drag the entire market down.

Compounding this market sentiment are geopolitical risks. The escalating Russia-Ukraine conflict and increasing instability in the Middle East have the potential to shake global markets and increase risk aversion.

Such developments could temporarily negatively impact crypto sentiment, especially for altcoins, as investors flock to safer assets.

In this environment, all eyes are on the Federal Reserve’s December meeting, which has important consequences for financial markets, including cryptocurrency.

There is currently a 52% chance that the Fed will cut interest rates by 25 basis points to 4.25%-4.5%.

If this reduction occurs, it could be a headwind for Bitcoin and the broader crypto market by easing borrowing costs and increasing liquidity.

Therefore, Bitcoin’s immediate path will likely be shaped by the balance between accumulation and market sentiment. As always, trade wisely and never invest more than you can afford to lose.

Disclosure: This article does not constitute investment advice. The content and materials on this page are for educational purposes only.