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Cryptocurrency

Bitcoin price exceeds 100K despite record profits for holders – market analysis

Horizonstocks

The recent price surge of Bitcoin (BTC) above the $100,000 mark has coincided with a significant drop in the supply held by its long-term holders. This trend indicates that seasoned investors are booking record profits as the market continues to climb towards six figures.

Realized Profits for Long-Term Holders Hit Record Highs

The chart below illustrates entities that hold Bitcoin for more than 155 days, referred to as long-term holders (LTH). Their behavior often reflects shifts in market sentiment.

  • Total Supply Held by LTH: As of December 19th, the supply held by LTH dropped to $13.31 billion compared to its local peak of around $14.23 billion two months ago, according to Glassnode data.

  • Price Movement: In the same period, BTC’s price has risen from approximately $58,000 to over $100,000, indicating that LTHs have been selling their holdings at local highs.

    Total Bitcoin supply held by LTH. Source: Glassnode

Bitcoin Uptrend Above $100,000 Far From Exhausted

Short-term holders (STHs) are stepping in to absorb sell-side pressure from long-term holders. The decline of the LTH supply has coincided with an increase in the Bitcoin supply held by STHs.

<img src="https://i.imgur.com/2yf4u1a.png" alt="Bitcoin total supply held by STHs. Source: Glassnode">

Glassnode Analysts’ Insights

In their weekly report, Glassnode analysts UkuriaOC and CryptoVizArt noted:

  • "The proportion of wealth held by these new investors has not yet reached the heights experienced during previous ATH cycle tops."
  • "The interpretation here is that the market may not have reached the level of euphoric fervor, and saturation by speculators seen in prior cycles."

True Market Deviation (AVIV Ratio) Analysis

Another useful metric to assess the state of the market is the True Market Deviation (AVIV Ratio), which measures the average unrealized profit – or paper gains – held by active investors.

  • Historical Context: Historically, bull markets tend to peak when nearly all investor categories achieve substantial profits. This scenario often results in overwhelming sell-side pressure, as investors lock in gains while new buyers hesitate to enter at elevated prices.

  • Current Market Conditions: The AVIV Ratio’s extreme band, defined as +3 standard deviations (σ), typically signals such overheated conditions. As of December 19th, it stood at 1.81, well below the extreme band of +3σ (2.3).

  • Implications: This suggests that while profits are rising, the market has not yet reached levels of unsustainable euphoria. So, Bitcoin could continue to climb even higher before profit-taking and reduced demand create a real market reversal.

    Bitcoin AVIV Ratio tops. Source: Glassnode

Bitfinex’s Price Prediction

Analysts at Bitfinex exchange estimate Bitcoin correction to be mild in the coming months, stating that growing institutional demand will eventually propel BTC price to $145,000 by mid-2025 or $200,000 in the best-case scenario.

  • Growing Institutional Demand: As of December 19th, Bitcoin exchange-traded funds (ETF) are currently managing a little over $37 billion worth of assets, compared to $24.23 billion at the start of November, according to Farside Investors data.
  • Speculation on Strategic Reserve
    Speculation is mounting within the crypto industry over the possibility that the incoming Trump administration could establish a strategic Bitcoin reserve for the United States, a move that could push the price toward $800,000 by the end of 2025.

Disclaimer

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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