Profit-taking and leverage weigh on momentum after post-election rally
Bitcoin (BTC), the world’s largest cryptocurrency, has seen an impressive rally in recent weeks, climbing over 40% since November 5, the day of the U.S. election. Despite nearing the key psychological milestone of $100,000, it has struggled to push past this level, sparking debates among analysts about the reasons behind the pause and the cryptocurrency’s future trajectory.
Post-Election Surge Fueled by Pro-Crypto Sentiment
The re-election of Donald Trump, a vocal supporter of cryptocurrencies, has boosted optimism in the digital asset market. Since the election, Bitcoin has hit record highs, peaking above $99,000 last week. However, the cryptocurrency has taken a breather, trading at $98,243 as of Monday, according to CoinGecko data. Analysts point to investor behavior and market dynamics as key factors behind the stall.
Profit-Taking and Supply Constraints
Andre Dragosch, head of research for Europe at Bitwise, attributes Bitcoin’s inability to cross $100,000 to profit-taking by long-term holders. “Long-term holders have started to distribute significant amounts of bitcoins into the recent rally,” he noted. This selling pressure has likely capped Bitcoin’s gains, though Dragosch suggests the pause may be a temporary bull market correction rather than a reversal of trend.
Additionally, the supply of new Bitcoin remains constrained following the halving event earlier this year, which halved the issuance rate for miners. Dragosch believes this supply squeeze will support prices moving into 2025.
Leverage and Market Dynamics
Mark Novogratz, CEO of Galaxy Digital, highlighted excessive leverage in the crypto market as another factor weighing on Bitcoin’s momentum. “The crypto community is levered to the gills,” Novogratz stated, suggesting that a pullback was inevitable. He also mentioned a significant unknown seller dumping between $92,000 and $94,000, with an estimated $14–$15 billion in Bitcoin sold over the past week.
Novogratz advises investors to focus on directly holding Bitcoin rather than relying on Bitcoin-exposed equities like MicroStrategy, which holds significant Bitcoin reserves.
The Road to $100K: A High Hurdle
David Morrison, senior market analyst at Trade Nation, sees $100,000 as a challenging barrier. He cautions that if Bitcoin loses momentum, it could encourage long-term holders to sell, potentially stalling further gains. However, Morrison remains optimistic about a potential surge if upside momentum rebuilds.
Regulatory Outlook
Donald Trump’s pro-crypto policies, such as pledging to make the U.S. a global crypto hub and forming a national crypto stockpile, have bolstered market sentiment. However, Marion Laboure of Deutsche Bank notes that significant regulatory reforms remain distant, requiring congressional approval and potentially falling short of market expectations.
Looking Ahead
As Bitcoin navigates the $100,000 hurdle, market dynamics and regulatory developments will play crucial roles in shaping its trajectory. While some expect a short-term pause, others see potential for another leg higher, driven by constrained supply and supportive sentiment. Regardless, Bitcoin’s performance will remain under the spotlight as investors and analysts watch for its next move.
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