As of late November 2023, Bitcoin BTC 1.63% has shown a strong price performance, reaching highs not seen in the past 18 months. According to a report from ZebPay, Bitcoin’s value surged above $38,000 on November 24, signaling robust bullish momentum. This peak, however, was met with some resistance, as buyers showed reluctance at these elevated levels.
Despite this, the general market sentiment remains optimistic, with expectations of further upward movement. This optimism is partly due to low open interest in derivatives markets coupled with steady demand in the spot market, setting up a potential scenario for the next surge.
Bitcoin’s trading range, as observed over the period, fluctuated significantly. It moved from a range of $25,000 to $28,500 with relatively low volumes, eventually breaking out above this range. It then established a pattern of ‘Higher High Higher Low’ and surpassed the long-held resistance level of $32,000, rallying up to $38,414.
At the time of the analysis, Bitcoin was consolidating within the $35,500 to $37,750 range, with strong resistance noted at the $40,000 mark. To sustain a further rally, it would need to break, close, and maintain above this psychological level, with strong support at $35,500 and $32,000.
A significant development in the crypto ecosystem has been the settlement between Binance, its former CEO Changpeng Zhao (CZ), and the SEC. This event is indicative of a larger shift towards regulated crypto entities and instruments, a trend gaining momentum post the FTX collapse. JPMorgan analyst Nikolaos Panigirtzoglou emphasized that this move towards regulation is a positive sign for the crypto ecosystem, potentially attracting traditional market participants and investors. The involvement of large traditional asset managers like BlackRock and Fidelity in the Bitcoin ETF race further supports this trend. There is also anticipation regarding the level of funds that might exit the Grayscale Bitcoin Trust (GBTC) as it converts to an ETF.
Despite the current price levels, some analysts foresee explosive growth for Bitcoin. Geoff Kendrick from Standard Chartered projects a potential price of $120,000 by the end of 2024, citing reduced selling activity by miners ahead of the halving. His predictions hinge on mining profitability and the assumption that miners will sell fewer tokens to maintain the same cash flow as Bitcoin’s price increases. This scenario could effectively reduce the net supply of Bitcoin by approximately 250,000 BTC. The halving event is also expected to lower Bitcoin’s annual inflation rate, which could positively influence its price.
Additionally, historical patterns show significant price increases for Bitcoin in the year following a halving, as the market adapts to the decreased new supply amid rising overall adoption and demand. This repeating trend leads analysts to predict a major bull market cycle for the crypto industry over the next year and a half.
An intriguing aspect of the current Bitcoin market is the holder behavior. Data from Glassnode reveals that a record high of 70.35% of Bitcoin’s circulating supply has been inactive on-chain for at least a year, surpassing the previous peak of 69.35% in July.
This indicates a strong belief among Bitcoin holders, with no inclination to sell even as the value more than doubled to $37,000 this year. Long-term investors are showing a tendency to hold onto their Bitcoin, with supply that has not moved on-chain in two, three, and five years also at their respective lifetime highs.
Reflexivity Research noted that while higher prices might eventually incentivize new sellers, the current trend shows that Bitcoin holders are not planning to offload their inventory at these levels or anytime soon. This behavior suggests a continued bullish outlook among investors.