Is Bitcoin’s March Toward $100k Backed by Robust ETF Demand?

Key Points

• Long-term holders (LTHs) of Bitcoin are taking profits, but this is balanced by demand from spot Bitcoin ETFs.
• Despite profit-taking by LTHs, Bitcoin’s price remains bullish as it inches closer to the $100,000 milestone.

Bitcoin’s current trading price is approximately $98,000. The market sentiment surrounding Bitcoin (BTC) remains positive as it moves closer to the significant $100,000 mark.

Bitcoin’s Long-Term Holder Activity

Market participants are keenly observing on-chain metrics to understand the market dynamics. Notably, profit-taking activities by long-term holders (LTHs) are evident. However, the rising demand from spot Bitcoin ETFs is offsetting this. The interaction between these factors could potentially influence BTC’s price trajectory in the near to medium term.

Data from the Long-Term Holder Position Change chart shows a significant increase in distribution, indicating a sharp decrease in LTH net positions in recent weeks. This phase is marked by considerable profit-taking activities. It is typical for the shift from accumulation to distribution during bull markets as LTHs profit from their long-term holdings.

The Long-Term Holder Spending Binary Indicator, which signals LTHs’ risk levels in terms of profit realization, is currently reflecting a “High Risk” zone at around 0.8. Historically, similar risk levels have coincided with local price peaks, suggesting caution for investors banking on a sustained rally beyond $100,000.

Demand for Bitcoin ETFs

The sell-off by LTHs is being counterbalanced by the robust demand for Bitcoin ETFs. Over the past month, the Spot ETF Position Change chart has recorded consistent inflows, with over 450,000 BTC allocated to ETFs. This indicates the strong interest of institutional investors, who consider ETFs as a simplified entry point into the crypto market. These ETF flows are crucial in absorbing the selling pressure.

In October, when LTH distribution intensified, ETF holdings experienced their most significant increase in months. This suggests that the demand from new participants and institutions could maintain Bitcoin’s price momentum.

Bitcoin’s Bullish Continuation

Bitcoin’s daily chart presents a promising technical outlook. The price remains well above key moving averages, with the 50-day and 200-day Moving Averages providing strong support levels at $74,000 and $65,000, respectively. Furthermore, the Bollinger Bands indicate increased volatility, with BTC trading near the upper band—a sign of bullish momentum.

Momentum indicators like the MACD and RSI further confirm the positive sentiment. The MACD is in bullish territory, with the histogram showing growing momentum, while the RSI is at 81, indicating overbought conditions. However, historical price trends suggest that Bitcoin can sustain rallies under such conditions during bull runs.

The interplay between profit-taking by long-term holders and demand from spot Bitcoin ETFs underscores a market balancing act. While the risk of a correction due to elevated LTH activity is present, the influx of institutional capital via ETFs could support Bitcoin’s bullish momentum. As BTC approaches $100,000, these metrics will be instrumental in shaping its path forward.