Emily Walker
Bitcoin has yet to surpass the expected $100,000 mark, as it experienced a corrective phase throughout most of the past week. Nevertheless, current market analyses indicate that the cryptocurrency is likely to exceed this crucial psychological barrier soon. Historical patterns combined with present market signals hint that Bitcoin might be approaching a significant rally as the year comes to a close.
December Rallies Post-Elections: A Promising Pattern
Historically, Bitcoin has shown notable price increases in December following US presidential elections held in November. After the elections in 2016 and 2020, Bitcoin experienced gains of 30.8% and 46.92%, respectively. It’s worth noting that the current environment surrounding Bitcoin is arguably more favorable than during those prior elections.
With the introduction of Spot Bitcoin ETFs, institutional investments have become a reality for Bitcoin, which was not available during the previous elections. This surge in institutional involvement has effectively absorbed more Bitcoins, especially during moments when both short- and long-term holders were cashing out.
The month of November has already proven to be beneficial for Bitcoin, concluding with a remarkable 38% increase. The spotlight is now on December, where the focus will be on Bitcoin’s performance.
The current market sentiment, as assessed by the Fear & Greed Index, reflects an atmosphere of extreme greed. Crypto analyst Ali Martinez has noted on social media that this level of enthusiasm among investors mirrors the previous bull run, during which Bitcoin’s price skyrocketed from $15,000 to $57,000 in just a few weeks.
If the historical patterns continue, a 30% or 46% increase this December could potentially lift Bitcoin’s price to anywhere between $125,000 and $140,000 by the year’s end.
On-Chain Data Signals a Significant Bitcoin Supply Shortage
Further supporting the bullish sentiment, on-chain analyses indicate that over 55,000 Bitcoins, valued at around $5.34 billion, were withdrawn from exchanges in the last 72 hours. Such notable outflows usually point towards a supply shortage as investors opt to transfer their assets to private wallets, suggesting a long-term optimistic outlook among Bitcoin holders.
Currently, Bitcoin is priced at $96,454, having fluctuated between $95,833 and $97,201 over the past day. Given its historical performance in December, coupled with strong market sentiment and tightened supply, Bitcoin seems well-prepared to target the $125,000 to $140,000 range by year’s end.
However, crucial resistance lies at the $100,000 mark. A successful breakout beyond this level is expected to trigger fear of missing out (FOMO) among investors. Conversely, Bitcoin needs to maintain its value above $90,000 to sustain most bullish perspectives. Fortunately, the average mining cost sits at $90,524, and Bitcoin has never dropped below this mining cost during prior bull runs.
Featured image from Pexels, chart from TradingView