Bitcoin has been flirting with the $100,000 milestone this week, coming within less than $1,000 of the psychological barrier, before pulling back to around $96,150, CNBC reports.
This significant rally has sparked optimism among some investors, but strategists remain divided on whether the cryptocurrency can sustain its momentum or if a correction is imminent.
One factor contributing to Bitcoin’s surge is the influx of long-term holders selling portions of their holdings as prices reached new highs.
“Long-term holders have started to distribute significant amounts of bitcoins into the recent rally,” said Andre Dragosch.
head of research for Europe at Bitwise Asset Management. This wave of selling increased the supply of Bitcoin on the market, potentially cooling its ascent.
Despite this, some experts remain cautious about Bitcoin’s ability to break through the $100,000 level. David Morrison, senior market analyst at Trade Nation, remarked that the $100,000 price point “feels as if it has become a high hurdle, if not a barrier, for further gains.” For some analysts, the recent rise might give investors a false sense of security. George Milling-Stanley, chief gold strategist at State Street Global Advisors, cautioned that Bitcoin remains primarily a “return play,” with investors focused more on potential capital gains than on the cryptocurrency’s long-term value proposition.
The launch of Bitcoin spot exchange-traded fund (ETF) options last week may have added fuel to the rally. These options allow investors to bet on Bitcoin’s price movements without buying the actual cryptocurrency, making it easier for more market participants to get involved. However, the increased leverage from such instruments could amplify the risk of a correction, according to Galaxy Digital CEO Mike Novogratz, who warned that “the crypto community is levered to the gills, and so there will be a correction.”
Nevertheless, the outlook for Bitcoin isn’t entirely pessimistic. Some believe that if cryptocurrency-friendly policies, such as those hinted at by US President-elect Donald Trump, come to fruition, Bitcoin could continue to climb beyond $100,000. While some see this milestone as a significant barrier, others view it as just another step in Bitcoin’s ongoing upward trajectory.
