Bitcoin should maintain its upward momentum and if this happens (Bitfinex) at $100k.

December has historically been a volatile and tepid month for bitcoin (BTC), and analysts on crypto exchange Bitfinex believe the digital asset may experience a short-term reversal. But a change in network dynamics could push it above $100,000.

According to a weekly report, BTC may rally above $100,000 this month if short-term holder (STH) demand can meet long-term holder (LTH) supply. At the time of writing, BTC was changing hands at $94,800, following a one-week consolidation between $90,000 and $98,000.

Can STH demand meet LTH supply?

Long-term owners of Bitcoin have begun to increase the demand for BTC in the market in order to spread their holdings more widely. Higher demand for BTC from institutional investors and the spot Bitcoin exchange-traded fund (ETF) market led to a recent rally.

LTH supply reached its peak in September, and since then, this pool of market participants has distributed about 508,990 BTC. While this figure represents a significant amount, Bitfinex noted that it is less than the 934,000 BTC LTH released during the March rally, which saw bitcoin reach a high of $73,666.

The past eight months have seen LTHs rally again after distributing their bitcoins before halving. However, with the resumption of the redistribution phase among this set of investors, STHs are buying and collecting rapidly. According to Bitfinex analysis, a decrease in LTH-held supply is expected at this stage of the bull cycle.

BTC needs ETF income and strong demand

As LTHs continue to gain, BTC will need positive ETF inflows and strong demand from margin buyers in the short term to maintain its upward momentum. This is because supply from LTHS into the Bitcoin market has been stagnant for the past two weeks and weak spot demand has not been able to absorb the supply, resulting in a significant price correction.

It's worth noting that the LTH Cost-Output-Profit Ratio (SOPR), which measures the profit margin at which this set of investors sells BTC, suggests that the market is not nearing the top. In past cycles, this metric has shown that LTHs trade at an average of 3.5x market capitalization. However, at the time of writing, the SOPR average hovers around 2.6x.

Also, the last leg of the bull market begins when STH supply crosses the pre-half cycle high of 3,282,000 BTC; This number is currently at 3,252,000 BTC.