On December 17, Bitcoin (BTC) reached a new all-time high of $108,365 before experiencing a short-term drop below $105,000. This price fluctuation occurred ahead of the United States Federal Reserve’s interest rate announcement on December 18, with markets anticipating a 25-basis-point cut.
Volatility Ahead of Interest Rate Announcement
The market’s anticipation of a possible interest rate cut led to short-term volatility in Bitcoin’s price. However, one crypto analyst highlighted a bullish scenario taking shape, suggesting that long-term holders are positioning themselves for future gains.
Bullish Scenario Takes Shape Amidst Decreased Profit-Taking
Bitcoin registered a surprising return of 37% in November 2024, reaching a new all-time high that was followed by a profit-taking frenzy. Selling pressure reached an estimated 366,000 BTC per month in November, valued at around $10 billion.
According to Percival, a verified Bitcoin analyst on CryptoQuant, the magnitude of profit-taking has significantly cooled down over the past three weeks. This is evident from the chart illustrating the net realized profit by long-term holders, which dropped from $10 billion on November 25 to $3 billion on December 14, despite BTC prices rallying 12% during that time period.
| Date | Net Realized Profit |
| — | — |
| Nov. 25 | $10 billion |
| Dec. 14 | $3 billion |
The analyst added, "This means that LTH [long-term holders] has realized most of its profits at this stage and is ready to see further increases."
Neutral Trend in Bitcoin Market
Additionally, with the help of a 90-day market vs. realized price gradient oscillator chart, Percival explained that the index is in an equilibrium zone of 0.5, indicating a neutral position between buyers and sellers.
| Date | Index Value |
| — | — |
| Dec. 14 | 0.5 |
A strong balance between the two sides demonstrates the potential for an ‘upward phase,’ as the crypto asset is neither overbought nor oversold.
Coinbase Premium Falls, Indicating Underlying Weakness
Despite the positive development of decreased profit-taking and a neutral trend, it is essential to note that the Coinbase premium has been falling since the beginning of December. Yonsei Dent, a pseudonymous crypto trader, highlighted that over the past two weeks, the premium has been on a ‘notable decline’ with respect to BTC prices.
| Date | Coinbase Premium |
| — | — |
| Dec. 1 | 10% |
| Dec. 14 | 2% |
The inverse correlation suggests that BTC’s rally was not supported by demand from US investors, indicating underlying weakness in medium-term upward momentum.
Independent Trader’s Perspective: Choppy Market Structure
Regardless of its choppy market structure, Daan Crypto, an independent crypto trader, stated that Bitcoin had followed last year’s price action. The trader expected the price to chop further as 2024 wraps up before an ‘actual breakout’ in Q1 2025.
Conclusion
In conclusion, despite short-term volatility, one crypto analyst highlighted a bullish scenario taking shape, with long-term holders positioning themselves for future gains. However, it is essential to note that the Coinbase premium has been falling since the beginning of December, indicating underlying weakness in medium-term upward momentum. Investors should remain cautious and monitor this development closely.
Additional Resources
- Why is Bitcoin price down today?
- Explore more articles like this
- Subscribe to the Markets Outlook newsletter
By subscribing, you agree to our Terms of Services and Privacy Policy. This article is for general information purposes only and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.