Bitcoin To Maintain Upward Momentum And Break $100,000 If This Happens (Bitfinex)

With December historically a volatile and turbulent month for bitcoin (BTC), analysts at crypto exchange Bitfinex believe the digital asset could experience a short-term pullback; however, a change in network dynamics could push it above $100,000.

According to a weekly report, BTC could maintain its upward momentum this month and break above $100,000 if the demand for short-term holders (STH) can meet the supply of long-term holders (LTH). At the time of writing, BTC was changing hands at $94,800, after a week of consolidation between $90,000 and $98,000.

Can the demand for STH meet the supply of LTH?

Long-term Bitcoin holders have begun to capitalize on the increased demand for BTC in the market to distribute its supply on a large scale. Increased demand for BTC from institutional investors and the Bitcoin exchange-traded fund (ETF) market fueled the latest rally.

LTH supply peaked in September, and since then this cohort of market participants has distributed approximately 508,990 BTC. While this number represents a significant volume, Bitfinex revealed that it is smaller than the 934,000 BTC LTH spent during the March rally, which led to a bitcoin high of $73,666.

Last eight months LTH was restocked after distributing their bitcoins before the halving. However, with the resumption of a phase of redistribution among this cohort of investors, STHs have been buying and accumulating rapidly. According to Bitfinex analysis, a reduction in LTH supply is expected at this stage of the bull cycle.

BTC needs ETF inflows and strong demand

As LTHs continue to take profits, BTC needs positive ETF flows and strong demand from short-term marginal buyers to maintain upward momentum. This is because the supply entering the Bitcoin market from LTH has been sustained for the past two weeks and a weak spot demand would not absorb the supply, resulting in a significant price correction.

It is worth mentioning that the LTH Spent Output Profit Ratio (SOPR), which measures the profit margin at which this cohort of investors sells their BTC, indicates that the market is nowhere near the top. In past cycles, this metric has shown that LTHs trade at an average profit of 3.5 times market highs; however, at the time of writing, the average SOPR stood at around 2.6 times.

Also, the final stage of the bull market begins when the supply of STH crosses the previous cycle high at the half of 3,282,000 BTC; this number currently stands at 3,252,000 BTC.

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