Bitcoin’s Road to $100K – Tear Down This Wall

Alex Thorn, Head of Firmwide Research at Galaxy Digital, provides an analysis of Bitcoin's recent performance and the factors influencing its trajectory

Bitcoin (BTC) price has not traded below $90,000 over the past week, building anticipation that the flagship digital asset will soon cross the $100,000 milestone. BTC price has rallied by as much as 50% since Nov. 4, the day before the United States election. After reaching new all-time highs of $99,860 on Friday, Nov. 24, BTCUSD retraced by as much as 8% to $91,420.

“In earlier Bitcoin times, this drawdown wouldn't have raised eyebrows, as sharp corrections were extremely common,” Thorn noted. “These days, however, all eyes are on Bitcoin, including many that have not been in the trenches of Bitcoin volatility for years.”

The sell pressure and supply distribution can be further analyzed by examining the UTXO Realized Price Distribution (URPD) metric. This metric shows the last time each coin in the circulating supply moved on a logarithmic scale. The metric is adjusted by realized price, which is the price of Bitcoin at the time each coin last moved.

The metric shows that a significant portion of the coins in the circulating supply were last moved at prices between $52,000 and $72,000. This suggests that many holders who acquired Bitcoin during the 237 days of sideways price action are now taking profits as BTC approaches $100,000.

In the options market, the opening options interest for the new spot-based Bitcoin ETFs totals more than $4.1 billion in notional value, with the majority ($3.1 billion) on call buying. Most call exposure is at strikes of $93,000 or higher, which Thorn interprets as a bullish signal.

“Market participants are bullish and positioning for further upside,” he stated. Crypto-native dealers are net short gamma at $93,000, meaning they need to hedge by buying as prices rise and selling as prices decline, potentially amplifying market volatility until BTCUSD reaches $106,000.

Regarding leverage in the system, Thorn observed that while leverage exists, it appears mostly healthy rather than excessive. Perpetual swap funding rates are not near the elevated levels seen in March 2024 or during previous market peaks. The three-month annualized basis is increasing following the post-election price movement but remains well below levels associated with market tops. Open interest is at all-time highs, but a significant portion is attributed to the Chicago Mercantile Exchange (CME), likely related to ETF owners engaging in basis trades or hedging by ETF authorized participants.

Together, these observations suggest that the Bitcoin bull market has “legs,” driven by increasing institutional, corporate, and potentially nation-state adoption, as well as favorable regulatory and policy developments. Several catalysts could propel Bitcoin higher in the near and medium term.

First, the easing of regulatory headwinds, including potential changes to the SEC's Staff Accounting Bulletin 121 (SAB 121), could pave the way for major custody banks to enter the crypto space. “Given we are very likely to see a material shift in the OCC's posture to banks interacting directly with cryptos, these big banks will eventually have their opportunity to get more involved,” Thorn predicted.

Second, a relaxation of the SEC's application of the Howey Test to digital assets, or the expansion of “crypto asset securities” tradable within broker-dealers, could allow more entrants into the exchange space, including traditional financial institutions. This could also lead to the approval of more spot-based crypto ETFs in the United States.

Further institutionalization of the Bitcoin and crypto market could increase financing options, enhance liquidity, and make spot crypto more accessible through existing institutional trading platforms. This would raise the maturity level of the institutional crypto market and potentially merge aspects of traditional finance and decentralized finance. “Depending on regulatory posture and any legislation that is enacted, the merger of TradFi and DeFi may finally be upon us,” Thorn suggested.

On the political front, Thorn highlighted the pro-Bitcoin stance of the incoming US administration. Scott Bessent, a known advocate for Bitcoin and crypto, has been chosen as the 79th Treasury Secretary. Vice President-elect J.D. Vance owns Bitcoin, as do Elon Musk and Vivek Ramaswamy, who will lead the new Department of Government Efficiency. Commerce Secretary nominee Howard Lutnick owns significant amounts of Bitcoin, and his company, Cantor Fitzgerald, is deeply involved in BTC and stablecoin markets.

Fox Business reported that the Trump transition team is planning for the Commodity Futures Trading Commission (CFTC) to take the leading role in digital assets regulation, rather than the Securities and Exchange Commission (SEC). This move is seen by industry observers as favorable. “This marks the latest in a swath of pro-Bitcoin cabinet officials,” Thorn observed.

Thorn mentioned the intensifying discussion around a potential