Emily Walker
In a research note called “Bitcoin’s Road to $100K – Tear Down This Wall,” Alex Thorn, who leads Firmwide Research at Galaxy Digital, analyzes Bitcoin’s recent price movements and the elements influencing its rise toward the $100,000 milestone.
Bitcoin has consistently remained above $90,000 for over a week, building expectations for a potential breakthrough above $100,000. Since November 4, just before the U.S. elections, Bitcoin’s value has surged by approximately 50%. It reached a peak of $99,860 on November 24, before experiencing a slight decline of about 8% to $91,420.
Thorn commented that this recent dip would not have raised concerns in the past when sharp corrections were commonplace. “These days, however, all eyes are on Bitcoin, including many that have not been in the trenches of Bitcoin volatility for years,” he pointed out.
He stressed that market corrections are natural, stating that “bull markets climb a ‘wall of worry.’” The timeframe from March 14, 2024, when Bitcoin hit $73,835, to November 6, 2024, saw a notable downward trend for 237 days, representing “one of the biggest and longest-to-resolve bull flags” Thorn had encountered.
Historical patterns highlight Bitcoin’s severe bear markets, with notable declines of over 80% during cycles in 2012, 2015-2016, and 2019. The downturn in March 2020 and late 2022/early 2023 saw Bitcoin drop by 75% from previous highs. Nevertheless, the recent 8% decrease is minor compared to the more extensive volatility during the earlier mentioned downward phase.
Who Is Selling Bitcoin Now?
Examining on-chain data, Thorn looked into current selling trends and supply distribution. The amount of Bitcoin held by long-term holders (those who have not transferred their assets for at least 155 days) has dropped as the BTC price increased after the election. This trend is more marked than the profit-taking seen that capped the previous all-time highs in March. However, the Coin Days Destroyed (CDD), which measures the movement of older coins, has not shown significant spikes, suggesting that very old coins are not circulating in the quantities observed during previous peaks.
Thorn raised an important question: “If ‘long-term holder’ supply is declining but very old coins aren’t moving, who is selling?” He attributed the current selling pressure to more recent long-term holders—those who purchased Bitcoin during the 237 days of consolidation from March to November 2024. The UTXO Realized Price Distribution (URPD) indicates substantial ownership of coins last moved when prices were between $52,000 and $72,000, suggesting these holders are cashing out as Bitcoin nears the $100,000 threshold.
In the options market, the total open interest for Bitcoin ETF options has surpassed $4.1 billion, primarily focused on call options, which amount to $3.1 billion. Most of this interest is concentrated at strike prices of $93,000 or higher, which Thorn interprets as a bullish signal. He noted, “Market participants are bullish and positioning for further upside.” Crypto-native dealers are net short gamma at the $93,000 mark, indicating they will need to buy as prices rise and sell as they drop, potentially causing increased volatility until Bitcoin reaches $106,000.
As for leverage, Thorn stated that while it exists, it appears to be healthy rather than excessive. Funding rates for perpetual swaps are not close to the heightened levels of March 2024 or previous peaks. Although three-month annualized basis rates are rising following the post-election price surge, they remain well below what typically aligns with market highs. Open interest is at record levels, but much of it seems related to the Chicago Mercantile Exchange (CME), indicating ETF holders engaging in basis trades or hedging activities.
Thorn expressed optimism about the longevity of the current Bitcoin bull market, attributing it to growing institutional and corporate adoption, as well as favorable regulatory developments. He noted several catalysts that could drive Bitcoin’s price higher in the near future.
Catalysts That Can Propel Bitcoin Above $100,000
Firstly, a reduction in regulatory obstacles, including possible adjustments to the SEC’s Staff Accounting Bulletin 121 (SAB 121), might allow major custody banks to partake more significantly in the crypto market. Thorn forecasts, “We are likely to see a substantial shift in the OCC’s stance regarding banks and their interactions with cryptocurrencies, opening doors for larger banks to become more involved.”
Secondly, a more lenient application of the SEC’s Howey Test to digital assets or the broadening of “crypto asset securities” that can be traded by broker-dealers might usher in more traditional financial institutions into the exchange space. This could lead to an increase in approvals for spot-based crypto ETFs in the U.S.
The further institutionalization of Bitcoin and the overall crypto market could enhance financial options, boost liquidity, and streamline access to spot crypto via existing institutional trading platforms. This transition could mature the institutional crypto landscape and potentially revolutionize finance by bridging traditional finance with decentralized finance. Thorn remarked, “Depending on regulatory stance and upcoming legislation, the convergence of TradFi and DeFi may finally be on the horizon.”
On the political front, Thorn underscored the favorable pro-Bitcoin attitude of the incoming U.S. administration. Scott Bessent, a noted Bitcoin advocate, has been selected as the 79th Treasury Secretary. Additionally, Vice President-elect J.D. Vance and several others in key positions hold significant Bitcoin investments, which may bolster pro-Bitcoin policies.
Fox Business reported that the Trump transition team is suggesting that the Commodity Futures Trading Commission (CFTC) take a primary role in regulating digital assets instead of the SEC, a shift viewed positively by market observers. “This marks the latest in a streak of pro-Bitcoin cabinet members,” Thorn mentioned.
Thorn also pointed out increasing conversations surrounding a potential U.S. Bitcoin strategic reserve, noting that other countries might race to establish more lenient policies on digital assets or set up their own reserves. Notably, Morocco is preparing new legislation to legalize crypto after a previous ban in 2017.
Upcoming events, like the Bitcoin MENA conference in Abu Dhabi on December 9 and 10, could yield significant announcements regarding adoption. The launch of spot ETF options could enhance liquidity and diminish volatility, making it easier for large institutions to engage with Bitcoin, potentially driving interest among U.S. retail investors, who make up 44% of retail equity options.
In conclusion, Thorn believes that the prospects for Bitcoin in the next 12 to 24 months are uniquely positive. He stated, “We believe Bitcoin may establish strong support and make another push to exceed the $100K level (the sell wall!) soon.”
As of now, Bitcoin is priced at $94,947.
