Bitcoin prices were hovering around $98,000 at the end of the week, with a sharp correction after passing the $100,000 milestone. BTC institutional demand and whale accumulation remain strong, supporting Bitcoin’s rally. Traders should exercise caution as funds are transferred from Mt. Gox, transferred by the US government, and profit taken by holders.
Bitcoin (BTC) passed the $100,000 milestone on a highly volatile Thursday and ended the trading week hovering around $98,000 after undergoing a sharp correction. Strong institutional demand, whale accumulation and the election of a crypto advocate to lead the U.S. Securities and Exchange Commission (SEC) fueled this week’s rally.
However, traders should be wary of a possible correction going forward as on-chain data shows holders taking profits at the highest. Additionally, any movement from the Mt. Gox fund or the U.S. government could increase selling pressure.
Bitcoin institutional investor demand and whale accumulation remain strong
Bitcoin soared past the $100,000 milestone on Thursday, reaching a high of $104,088 before plummeting to $90,500. It eventually recovered to close above $96,900. As of Friday, it was trading just above $98,000.
Institutional demand supported Bitcoin’s rally this week. According to Coinglass, Bitcoin Spot exchange-traded fund (ETF) data showed total inflows of $2.4 billion through Thursday, compared to $136.5 million in outflows last week. If this inflow trend persists or accelerates, it could provide further momentum to the ongoing Bitcoin price rally.
Total Bitcoin Spot ETF inflow chart. Source: Coin Glass
Bitcoin mining company MARA Holdings added more BTC this week. According to data from cryptocurrency intelligence tracking firm Arkham, MARA's holdings increased from 17,000 BTC on Monday to 22,000 BTC on Friday, making its total holdings worth $2.17 billion.
The potential for companies like MARA to incorporate Bitcoin as a reserve asset is good news for Bitcoin, as it signals increased adoption by major corporations.
MARA BTC holding chart. Source: Arkham
As Bitcoin fell from $100,000 on Thursday, whales seized the opportunity to buy 600 BTC worth $58.85 million, according to Lookonchain data. Over the past two weeks, this whale has accumulated 1,300 BTC, worth $127 million.
More optimistic signs for Bitcoin
Multiple optimistic news and events supported BTC's rise towards the $100,000 milestone this week. First, MicroStrategy co-founder Michael Saylor gave a presentation to Microsoft's board of directors on why the tech giant should buy Bitcoin.
“Microsoft can't afford to miss out on the next wave of technology, and Bitcoin is that wave,” Saylor said.
According to a report by QCP Capital, Microsoft shareholders are scheduled to vote on a proposal to add BTC to its balance sheet on December 10th. “If this proposal passes, it will be bullish not only for BTC but also for other investments,” the report notes.
The announcement of the new chair of the US SEC on Wednesday added further bullish momentum to Bitcoin. President-elect Donald Trump has confirmed the nomination of Paul Atkins, CEO of Patomac Global Partners, to the role. This announcement had a positive impact on the market as Atkins is considered a crypto supporter.
On the same day, Bitcoin also received support from another prominent figure, Vladimir Putin.
“Who can ban Bitcoin? No one. And who can ban the use of other electronic payment methods?” the Russian president said Wednesday at an investment forum in Moscow, according to a Twitter post by Watcher.Guru. Said.
Bearish signs to watch out for
After BTC rose above $100,000 this week, Bitget Wallet COO Alvin Kan told FXStreet that he expects a “healthy correction” to occur soon.
“Market volatility is likely to continue to increase, so users should be careful with the leverage of their futures contracts to avoid the risk of liquidation due to sudden declines. After the correction, the altcoin season may continue.” It is important to focus on sector rotation because it is high,” Kang said.
Another short-term risk to Bitcoin prices after the recent rally is profit taking. Santiment's network realized profit and loss (NPL) metric suggests that holders are booking profits at the top. BTC's bad debt indicator spiked on Thursday, indicating that holders are selling their bags at a sizable profit on average. A similar spike was seen on November 21st, followed by a correction of more than 7% over the next five days. If history repeats itself, BTC could experience a similar decline in the short term.
BTC bad debt chart. Source: Santiment
Arkham, a U.S. government-linked wallet, moved 10,000 BTC worth $962.88 million from a seized Silk Road address to Coinbase Prime on Monday, according to data from cryptocurrency intelligence tracker Arkham. On Tuesday, the US government wallet carried out a similar move, moving a number of altcoins worth $33.59 million, including Ethereum, Compound, and Axie Infinity, to the new wallet.
Additionally, as BTC prices rose to six digits on Thursday, defunct exchange Mt.Gox transferred 24,052 BTC worth $2.43 billion to a new wallet, according to Lookonchain data. Similarly, on Friday, Mt Gox wallet transferred 3,620 BTC worth $352.69 million to two new wallets.
If any of the wallets mentioned above are looking to sell or distribute these coins, it could create bearish sentiment as market participants expect an increase in supply.
Technical Outlook: Will BTC rise towards $120,000 or fall to $85,000?
Bitcoin price surpassed the milestone of $100,000, reaching a high of $104,088 before plummeting to a low of $90,500 on the day, before recovering to reach $96,900 on Thursday. It closed above the dollar. As of writing on Friday, it was hovering around $98,000.
Despite recovering from Thursday’s decline, Bitcoin’s Relative Strength Index (RSI) is flashing red flags. The higher high formed on Thursday does not reflect the RSI chart for the same period and indicates the formation of a bearish divergence, which often leads to a short-term correction.
If this bearish divergence plays out, traders could expect a slight rally (either gaining liquidity or a long trap) towards the recent high of $104,088, followed by a sharp decline towards the $90,000 support level. There is a gender. A close below this level could open up further declines towards the next support level at $85,000.
BTC/USDT daily chart
On the other hand, if BTC continues its upward trend and closes above $104,088, the rally could widen towards a new all-time high of $119,510. This level coincides with the 141.4% Fibonacci extension line drawn from the November 4 low of $66,835 to Thursday's close. The all-time high was $104,088.
Frequently asked questions about Bitcoin, altcoins, and stablecoins
Bitcoin is the largest cryptocurrency by market capitalization and is a virtual currency designed to function as money. This form of payment is not controlled by any particular person, group, or entity and eliminates the need for third parties to participate during financial transactions.
An altcoin is any cryptocurrency other than Bitcoin, but some consider Ethereum to be a non-altcoin because it is these two cryptocurrencies that forks occur. If this is true, Litecoin would be the first altcoin to fork from the Bitcoin protocol and thus be an “improved” version of it.
A stablecoin is a cryptocurrency that is designed to have a stable price, and its value is backed by the reserves of the asset it represents. To achieve this, the value of one stablecoin is pegged to a commodity or financial instrument, such as the US dollar (USD), and its supply is regulated by an algorithm or demand. The main purpose of stablecoins is to provide an on/off ramp for investors who wish to trade and invest in cryptocurrencies. Also, since cryptocurrencies are generally volatile, stablecoins allow investors to store value.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the market capitalization of all cryptocurrencies combined. This clearly shows the interest in Bitcoin among investors. BTC's dominance typically occurs around bull markets, where investors turn to relatively stable, high-market-cap cryptocurrencies like Bitcoin. Decreasing BTC dominance usually means investors are moving their capital and profits to altcoins in search of higher returns, which usually causes an explosive rally in altcoins.
