Bitcoin Price May Set Up for a Breakout to $120,000
The price of Bitcoin (BTC) may be on the verge of a significant breakout, potentially reaching as high as $120,000 in January. This prediction is based on several factors, including a new all-time high in stablecoin reserves on the cryptocurrency exchange Binance.
A 10% Correction and a Potential Rally
Following its previous all-time high of $108,300 recorded on December 17, Bitcoin experienced a 10% correction. However, this correction may be setting up for a rally, according to data from Cointelegraph Markets Pro. The chart below shows the BTC/USD price movement over the past month.
BTC/USD, 1-month chart
Source: Cointelegraph
Donald Trump’s Inauguration and a Potential Rally
The upcoming inauguration of United States President-elect Donald Trump on January 20 may also contribute to a rally in Bitcoin prices. According to Ryan Lee, chief analyst at Biget Research, BTC could peak above $120,000 during January.
A Local Top Above $120,000?
Lee predicts that Bitcoin could see a local top above $120,000 before experiencing a potential correction driven by profit-taking. This correction may be offset by the "January effect," characterized by renewed investments and optimism in the new year.
Profit-Taking and Market Corrections
While profit-taking from 2024 gains may introduce market corrections, this should not deter investors from participating in the rally. To gauge BTC’s performance, investors should be mindful of spot Bitcoin exchange-traded fund (ETF) inflows, the performance of the US stock market, and incoming FTX repayments scheduled for January 3.
Aligning with Other Analysts
Lee’s predictions align with those of other analysts who foresee Bitcoin recapturing the six-figure price tag in January. One such analyst is Raoul Pal, who bases his prediction on Bitcoin’s correlation with the global liquidity index.
GMI Total Liquidity Index, Bitcoin (RHS)
Source: Raoul Pal
According to Pal, BTC could peak at a local top above $110,000 in January before experiencing a potential correction. The chart below shows the GMI total liquidity index for Bitcoin.
Stablecoin Reserves and the Rally
The rally during January is set to benefit from nearly $45 billion worth of stablecoins awaiting deployment on Binance. Stablecoin reserves on the exchange surpassed $44.5 billion on December 31, nearing the all-time high of $45.8 billion registered on December 11.
Stablecoin Exchange Reserves, Binance
Source: CryptoQuant
On December 11, BTC gained over 4.7% intra-day to close above $101,000, driven by stablecoin reserves. Increasing stablecoin inflows to crypto exchanges can signal incoming buying pressure and growing investor appetite.
Overcoming Resistance Above $95,000 and $96,400
However, Bitcoin needs to overcome significant resistance above $95,000 and $96,400 before continuing its upward trend. A potential move above $96,400 would liquidate over $1.24 billion worth of leveraged short positions across all crypto exchanges.
Bitcoin Exchange Liquidation Map
Source: CoinGlass
Analysts Remain Optimistic About Bitcoin’s 2025 Trajectory
Despite the potential corrections and challenges ahead, analysts remain optimistic about Bitcoin’s 2025 trajectory. Some predict a rally to $160,000 driven by improving US financial policy.
Magazine: BTC Hits $100K, Trump Taps Paul Atkins for SEC Chair, and More: Hodler’s Digest, Dec. 1 – 7
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