Putting Bitcoin on the Spot.

Compass 154

At the start of the week, our playbook outlined the following scenario:

Psychologically, we need to see it from this perspective: the previous bearish movement didn’t liquidate altcoins, which remained strong or experienced only minor pullbacks. This current correction, which has led to more than a$1.7B in liquidations, has significantly shaken the altcoin market, effectively cleaning it up completely.

As we said: Rough start to a bullish week. Bitcoin has reclaimed the $100K level (currently trading at $102k), but it seems one more decisive move is needed to enter discovery mode and ignite a final push for the end-of-year rally. What’s next?

And Microsoft Said No, but Nasdaq Said Yes.

• Earlier this week, we highlighted the vote among Microsoft shareholders on whether to adopt Bitcoin as a treasury asset for the world’s third-largest company by market capitalization (approximately $3.3T). The decision was overwhelmingly a NO.

• While we didn’t expect a different outcome, the idea made sense within the context of the policy shift triggered by Trump’s victory in the U.S. elections. All we can say is: we are so early.

• But in another milestone for the crypto industry, the Nasdaq 100 Index has announced the inclusion of MicroStrategy, starting on December 23. This will increase the exposure of TradFi investors, both retail and institutional, to Bitcoin, at least indirectly. It’s happening—slowly, but it’s happening.

• On a macro level, all indications suggest we’ll see an interest rate cut at the final FOMC meeting of the year, continuing to expand liquidity into the market for the upcoming year. As we predicted, the inflation data was not a significant market mover because the die is already cast. Nothing stops this train.

Speedometers indicating the current state of BTC. The full dot represents the current reading and the white dot represents one week ago.

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The Board Keeps Moving.

• We are observing that, for some reason, Bitcoin's price is being held back in a resistance zone between $101.5K and $102.6K—a heavily congested area being defended by the bears. What are the market participants doing?

Net Position Change in BTC.

• Long-Term Holders (LTH) have not stopped selling their BTC, bringing their total holdings to their lowest levels this year. This week marked the largest exit of LTHs in 2024, following two sharp dips caused by a wave of liquidations. Regardless of the price, the end-of-year seasonality impacts profit-taking behavior. The beginning of the year could also mark a turning point, potentially ending the LTH selling streak.

LTH Net Position Change.

• Currently, their holdings are at yearly lows, with everything accumulated since July now out of their hands. Our theory suggests that after the year ends, this selling pressure might ease. If Bitcoin rises further, it could also motivate more sales at higher prices. The recent volatility and long liquidations have triggered additional selling, and another significant correction could either prompt further sales or encourage LTHs to hold for longer. It's crucial to see the selling curve—currently the steepest for LTHs—ease in the coming weeks.

LTH Total Supply.

• Past analyses show that whales remain bullish in their Bitcoin purchases. However, sharks (addresses holding 100–1,000 BTC) have been less discreet, engaging in a buying spree since early November after the U.S. elections. Their buying behavior has been the most aggressive of the year, especially in early December, highlighting institutional interest in Bitcoin, likely from ETF managers acquiring BTC aggressively at high prices.

Sharks Activity.

• Short-term holders (STH) have continued increasing their holdings and did not retreat during the two waves of Bitcoin liquidations. Their behavior is similar to the sharks, buying strongly once the price broke the previous all-time high and began the "Trump pump" rally.

STH Total Supply.

• Although STHs have transferred BTC at a loss to exchanges, this has not been significant enough to trigger a larger correction. Most of these losses stemmed from liquidations and the Bitcoin dip but remain within normal patterns. Larger loss peaks occurred in Q1 of this year, and the current sell-offs in losses have not reached comparable intensity over a similar period.