Bitcoin Faces Major Test: 5 Essential Insights for BTC This Week

• Bitcoin is closing the year with varied bullish on-chain metrics, including a high Binance stablecoin reserve.
• The on-chain data shows Bitcoin is primed for a bullish start in 2025.

Bitcoin (BTC), the world’s leading cryptocurrency, still faces crucial tests after dropping below $100,000. Despite the recent decline, BTC price metrics are giving bulls cause for confidence. Here are five essential insights for the leading cryptocurrency this week.

Bitcoin Hovering Around Range Lows 

At press time, Bitcoin trades at $93,042, hovering near the lows of its December trading range, per data from MarketCap. Notably, Bitcoin saw a lack of overall momentum during the Christmas festivities. However, there are signs of short-term change as the final two Wall Street trading days of 2024 begin.

Crypto analyst Skew commented on Bitcoin’s current performance in a post on social media X. Referencing the value area low and weekly open, Skew stated, “Price is currently trading around key VAL, last week’s low & HTF trend. ‘Volatility is brewing imo,’” the analyst added.

Skew advised traders to watch the weekly open, which came in at around $93,550 on Bitstamp. He believes this price, which often determines control and trends, would continue to play an important role in the short term.

Seller Weariness Develops As Metric Nears 3-Month Lows

While the Bitcoin bull run paused at around $108,000, the December BTC price downside remains modest at 15%. When comparing current drawdowns in bull markets to past cycles, the 15% dip is at the lower end of historical behavior. Glassnode, an on-chain analytics platform, puts the $90,000 trip into context.

Glassnode pointed to Short-Term Holders (STHs) to identify when the market could bounce after BTC/USD hit old all-time highs of $73,800 in March. It suggested that Bitcoin’s Market Value to Realized Value (MVRV) metric and realized losses contributed to the price movement.

The Point-In-Time STH Profit/Loss Ratio, which Glassnode claims “detects local bottoms in bull markets and local tops in bear markets,” has finally reached its breakeven point. This metric fell below one in early October when Bitcoin/USD traded at $60,000.

Heightened Stagflation Risks

Another quiet holiday week for US markets means unemployment figures will again form the main macroeconomic data print in the coming days. Initial jobless claims are due on January 2, the first key macro numbers for risk assets in 2025. Cypto remains sensitive to employment shocks against a background of “stagflation” signs.

Markets continue to price out the likelihood of further rate cuts next year. However, the Federal Reserve has one month to go until its next meeting on interest rates. 

In an X thread, the Kobeissi Letter, a trading resource, wrote, “The Fed is cutting rates due to a weaker labor market while inflation rebounds. The beginning of stagflation is here, and the Fed has yet to acknowledge it. We could see 4%+ inflation next year.”

WOW.

US equity funds saw a -$35.3 BILLION net outflow last week, the largest weekly outflow since December 2022.

This is a sharp contrast to the ~$14 billion of weekly net INFLOWS seen since Fed interest rate cuts began.

What does this mean as we head into 2025?

(a thread)

— The Kobeissi Letter (@KobeissiLetter) December 29, 2024

Whales Raise Bullish Outlook

Recent analysis suggests that the crypto market might have what it takes to close out 2024 strongly, if not at a record high. Research firm Santiment highlighted increased whale activity as a possible source of “green” candles for the coming year.

Santiment’s prediction is based on the decline in trading volume in the overall crypto market. Overall, the trading volume has reduced by 64% in the past week compared to the previous week (which included Bitcoin’s all-time high).

Santiment claims the lack of retail participation may lead to at least one final big unexpected 2024 pump if whales continue showing a strong accumulation trend.

Influence of Stablecoin Reserves on Binance

Finally, stablecoin reserves on the crypto exchange Binance point to investor confidence. 

According to CryptoQuant, Binance, the second-largest exchange by volume flows, recently recorded its stablecoins reserve reaching $31 billion. Notably, this marks a nearly fivefold increase from the $7 billion recorded in June 2023.

Historically, increased stablecoin reserves indicate that the buying pressure is growing. Thus, the stablecoin reserves surged to $31 billion, suggesting that investors remain actively positioned in the market.