Bitcoin’s Path to $100,000: A Comprehensive Overview
In a detailed research note titled “Bitcoin’s Road to $100K – Tear Down This Wall,” Alex Thorn, Head of Firmwide Research at Galaxy Digital, delves into the recent trends surrounding Bitcoin and the influences propelling it towards the significant $100,000 threshold.
Recent Bitcoin Performance and Market Dynamics
Bitcoin has maintained a steady trading price above $90,000 over the past week, sparking optimism that surpassing $100,000 is imminent. Since November 4, the day prior to the U.S. elections, Bitcoin has surged by an impressive 50%. On November 24, Bitcoin reached unprecedented heights of $99,860 before experiencing a retracement of 8% to $91,420.
Thorn remarked that in earlier times, such a correction would not have been noteworthy due to the frequent sharp adjustments in Bitcoin’s history. However, in today’s market, Bitcoin garners immense attention, including from those unfamiliar with its historical volatility.
The Importance of Market Corrections
Thorn highlighted the importance of corrections as a natural component of market cycles. He stated that bull markets often climb a ‘wall of worry,’ and from March 14, 2024, to November 6, 2024, Bitcoin experienced a significant downward range for 237 days, forming one of the most substantial and prolonged bull flags he had ever witnessed.
Historical Context of Bitcoin Bear Markets
Historical data indicates that Bitcoin’s bear markets have been notably severe. Past cycles in 2012, 2015-2016, and 2019 saw Bitcoin trading at over 80% below its previous peaks. The periods of March 2020 and late 2022/early 2023 witnessed Bitcoin dipping to 75% of its earlier highs. However, the recent 8% decline last week is minor compared to the volatility observed during the extensive 237-day downward trend in 2024.
Current Bitcoin Selling Trends
Thorn analyzed on-chain data to assess current selling pressures and supply distribution. The supply held by long-term holders (LTH)—those retaining their coins for at least 155 days—has decreased as Bitcoin’s price surged post-election. This decline outpaces the profit-taking seen during the peak run in March. However, the Coin Days Destroyed (CDD) metric, which tracks the movement of older coins, is not showing a significant spike. This indicates that very old coins are not moving at the volumes typically seen during market tops.
Thorn posed the question, “If ‘long-term holder’ supply is declining but very old coins aren’t moving, who is moving and selling coins?” He explained that the sell pressure appears to originate mainly from recent LTH supply—those who acquired Bitcoin during the 237 days of market consolidation between March and November 2024. The UTXO Realized Price Distribution (URPD) metric reveals significant ownership of coins last moved between $52,000 and $72,000, suggesting these holders are taking profits as Bitcoin nears $100,000.
The Options Market and Open Interest
In the options market, the open interest for new options on spot-based Bitcoin ETFs amounts to over $4.1 billion in notional value, with the majority ($3.1 billion) in call buying. Most call exposure is at strikes of $93,000 or higher, which Thorn sees as a bullish indicator. “Market participants are bullish and positioning for further upside,” he stated. Crypto-native dealers are net short gamma at $93,000, meaning they need to hedge by buying as prices rise and selling as prices decline, potentially amplifying market volatility until BTCUSD reaches $106,000.
Leverage and Institutional Adoption
Thorn noted that while leverage exists within the system, it appears mostly healthy rather than excessive. Perpetual swap funding rates are not approaching the elevated levels observed in March 2024 or during previous market peaks. The three-month annualized basis is increasing following the post-election price movement but remains well below levels associated with market tops. Open interest is at an all-time high, but a significant portion is attributed to the Chicago Mercantile Exchange (CME), likely related to ETF owners engaging in basis trades or hedging by ETF authorized participants.
Thorn expressed confidence in the longevity of the Bitcoin bull market, citing increasing institutional, corporate, and potentially nation-state adoption, as well as favorable regulatory and policy developments. He identified several factors that could propel Bitcoin higher in the near and medium term.
Key Catalysts for Bitcoin’s Ascent Beyond $100,000
Regulatory Developments and Institutional Entry
Firstly, easing regulatory headwinds, including potential changes to the SEC’s Staff Accounting Bulletin 121 (SAB 121), could open the door for major custody banks to enter the crypto space. “We are likely to witness a significant shift in the OCC’s stance on banks engaging directly with cryptocurrencies, allowing large banks to seize the opportunity to become more involved,” Thorn predicted.
SEC and the Howey Test Adjustments
Secondly, a relaxation in the SEC’s application of the Howey Test to digital assets, or the expansion of “crypto asset securities” tradable within broker-dealers, could allow more participants into the exchange space, including traditional financial institutions. This could also lead to the approval of more spot-based crypto ETFs in the United States.
Institutionalization and Market Maturity
The further institutionalization of the Bitcoin and crypto market could enhance liquidity, increase financing options, and make spot crypto more accessible through existing institutional trading platforms. This progression would raise the maturity level of the institutional crypto market and potentially revolutionize aspects of finance by merging traditional finance and decentralized finance. “Depending on regulatory posture and any legislation that is enacted, the merger of TradFi and DeFi may finally be upon us,” Thorn suggested.
Political Influences and Strategic Reserves
On the political front, Thorn highlighted the pro-Bitcoin stance of the incoming U.S. administration. Scott Bessent, a known advocate for Bitcoin and crypto, has been appointed as the 79th Treasury Secretary. Vice President-elect J.D. Vance is known to own Bitcoin, as do Elon Musk and Vivek Ramaswamy, who will lead the new Department of Government Efficiency. Commerce Secretary nominee Howard Lutnick owns significant amounts of Bitcoin, and his company, Cantor Fitzgerald, is deeply involved in BTC and stablecoin markets.
Fox Business reported that the Trump transition team plans for the Commodity Futures Trading Commission (CFTC) to take the lead role in digital assets regulation, rather than the Securities and Exchange Commission (SEC). This move is perceived by industry observers as favorable. “This marks the latest in a wave of pro-Bitcoin cabinet officials,” Thorn noted.
Thorn also mentioned the growing discussion around a potential U.S. Bitcoin strategic reserve, suggesting that other nations might seek to preempt the United States with more permissive policies on digital assets or by establishing their own reserves. For instance, Morocco is preparing new legislation to legalize crypto after banning it in 2017.
Forthcoming Events and Institutional Interest
Upcoming events such as Bitcoin MENA in Abu Dhabi on December 9 and 10 could feature significant adoption announcements. The introduction of spot ETF options could enhance liquidity and potentially reduce volatility, making it easier for large institutions to enter the asset class and possibly spurring interest among U.S. retail investors, who account for 44% of retail equity options.
Conclusion: Bitcoin’s Unique Setup for the Future
In conclusion, Thorn believes that the setup for Bitcoin’s price over the next 12 to 24 months is unique and bullish. “All this to say that the setup for Bitcoin over the next 12 to 24 months appears unique and bullish,” he asserted. “We believe Bitcoin may find a strong base of support and could make another attempt to surpass the $100k level (the sell wall!) in the near term.”
At the time of writing, Bitcoin is trading at $94,947.
