With the end of the year fast approaching, most investors will likely liquidate positions to present a decent annual return, one observer said. Bitcoin needs to chart a 77% rally over the next four weeks to hit the widely forecast year-end value of $ 100,000. While analysts are bullish on the cryptocurrency, they don’t anticipate a six-figure rally anytime soon.
The latest Commitment of Traders report shows a net long positioning on the Chicago Mercantile Exchange, with increased commitment from asset managers said Laurent Ksiss, Exchange Traded Fund (ETF) Expert and Director of CEC Capital. The report was released on Friday. “Having said that, it won’t be enough to commit to the $ 100,000 rally this month as everyone predicts was predicting. Ksiss said that the cryptocurrency remains vulnerable to price pullbacks fueled by laundering of leverage.
As long as the long-term trend remains positive, short-term pressures and sell-offs, due to the higher leverage offered, remain high and will continue to put pressure on the price of BTC Ksiss added. While the open interest (OI) of bitcoin futures in US dollar terms has recently declined along with the price of the cryptocurrency, the metric is still high when measured in BTC terms, indicating excessive leverage in the market.
Open interest refers to the number of contracts traded but not settled with offsetting positions. With the end of the year fast approaching, most investors will likely undo their risk position, allowing them to present decent annual returns Ksiss said. “We don’t see a bull run in 2021. More than 75% of the supply can be considered illiquid at the time of publication, according to data from Glassnode. Illiquid supply is defined as the number of coins stored at addresses that spend less than 25% of their incoming coins.
Matthew Dibb, chief operating officer and co-founder of Stack Funds, said the chance of bitcoin rising to $ 100,000 is decreasing as the macroeconomic environment does not appear to be conducive to prices, especially with the recent aggressive turn from the president of the Federal Reserve, Jerome Powell. The central bank could discuss accelerating the phasing out of bond purchases or reducing asset purchases at the December meeting, Powell said earlier this week.
While we are optimistic in the short term, there is growing doubt that it will hit $ 100,000,” Dibb said. “However, renewed interest is showing in ether and other currencies associated with layer 1 blockchains. While bitcoin is down 1.4% this week, ether is up around 5%. The ether-bitcoin (ETH / BTC) ratio has outgrown its multi-month consolidation, indicating ether’s leadership ahead or money turnover from bitcoin to ether and other alternative cryptocurrencies in the coming weeks.
With the end of year fast approaching, most investors will probably unwind their risk-on position allowing them to present decent yearly performances, Ksiss said. “We do not see a bull run in 2021. Over 75% of supply can be considered illiquid at press time, according to Glassnode data. Illiquid supply is defined as the number of coins held in addresses that spend less than 25% of their incoming coins.
Matthew Dibb, COO and co-founder of Stack Funds, said the chance of bitcoin rallying to $100,000 is getting slimmer by the day as the macroeconomic environment doesn’t appear price supportive, especially with Federal Reserve Chairman Jerome Powell’s recent hawkish turn. The central bank could discuss speeding up the bond-buying taper or scaling back of asset purchases at the December meeting, Powell said earlier this week.
While we are bullish for the short term, there is growing doubt that $100,000 will be hit,” Dibb said. “Renewed interest is, however, being shown in ether and other coins associated with layer 1 blockchains. While bitcoin is down 1.4% this week, ether has risen around 5%. The ether-bitcoin (ETH/BTC) ratio has broken out of its multimonth consolidation, signaling ether leadership ahead or rotation of money out of bitcoin and into ether and other alternative cryptocurrencies in coming weeks.
Right now, ETH seems poised to hit new highs against BTC, something we haven’t seen since the ICO mania of 2017, noted David Hoffman, founder of the Bankless newsletter. One theme we’ve seen throughout Ethereum’s history is that the ETH / BTC chart rises in bull markets and falls during bear markets. Hoffman added that the potential breaking of the ratio above 0.80 would bring another “wild period in the crypto markets.” ETH / BTC is currently trading near the 0.80 mark on Binance.
A bull run to $ 100,000 seems unlikely as there could be a big altcoin rally later this month, said MintingM, a Mumbai-based crypto asset management company. Still, MintingM said that Bitcoin could surprise everyone if a major company or country accepts it as a means of payment or if the US Securities and Exchange Commission (SEC) approves a spot ETF.
Based on historical data, bitcoin could rise to around $ 73,000, roughly $ 29% above the current price of $ 56,400, if the macro situation improves and ether registers a strong supply, lifting the entire market. The average return from Thanksgiving through the end of the year has been 29%, with a powerful 72% rebound in 2020,” said Jeff Dorman, Arca’s CIO, in a blog post published Monday.