I don't typically do predictions, but given the wild speculation out there, I thought I'd temper expectations by explaining why I think BTC will end up just shy $50,000 by January 10th, which is when the final decision for a Bitcoin spot ETF is to be made.
Traders are going nuts because of the chart below. It's a 4-hour timeframe on BTC. The white line is the LSMA 160. The long-term trend range goes back to the early parts of the crypto winter.
At the top is a 3-week trading range that BTC appeared to be stuck in. But it finally broke out above the top of that a little over a day ago.
Sentiment for BTC and the market in general is extremely positive (see the AI sentiment outlook below). The reasons are also mechanical because a BTC spot ETF will allow more liquidity to into the crypto market (I had an explanation on mechanical coins worth reading here
Think of it like this. Liquidity (unencumbered capital available for investing) is like a reservoir, your investments are crops, flows are the actual water moving to water your crops. While the reservoir is a necessary condition, flows are a sufficient condition for helping your crops flourish.
Because the entire crypto market is 1/2 the size of Apple's stock (its market cap is almost $3 trillion, while cryptos sit at $1.4 trillion), flows are all that matter. If we have enough flowing into the market in anticipation of the ETF approval, a 20% jump in BTC price looks realistic.
Below is a data point about flows. It shows the price of BTC in black, the supply held by long-term holders in blue, and the short term in red. The peach-colored portion is circulating supply.
You'll see that long-term holders tend to sell out in a price spike. No such thing is happening at present = the upward trend in BTC is sustainable.
Here's another data point: entity-adjusted realized profits.
Our team at 1.2 Labs sources data from many sources Join our Discord Community Here?? Some of that is from a premium subscription to Glassnode (which you can only afford if you are running a professional firm). In this case, they've done the heavy lifting of grouping on-chain wallets to give us entity holders and not individual wallet holders. That eliminates noise for the chart below.
You'll notice when the green starts, the price of BTC (in gray) goes up. A spike in BTC price requires many people in the green because people start talking about BTC gains to other people. A self-reinforcing loop follows. We appear to be on the verge of that.
Forecasting anything as volatile as cryptos is exceedingly difficult, but the trader's view about a BTC break-out combined with flow data does indicate that a 20% jump in BTC price in about 40 days isn't out of the question. As always DYOR.
Happy Trading!!
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