Bitcoin (BTC) rose back to $102,000 on January 6, increasing by 4% over the day, as the market saw a general rise. This came as more people were buying Bitcoin rather than selling it, according to CryptoSlate data.
At the time of writing, Bitcoin was priced at $101,630 after losing some of its upward momentum as US markets closed. The recovery happened as the amount of Bitcoin available for sale continued to decrease, according to a recent Bitfinex Alpha report.
Bitcoin’s return to $102,000 followed a 15% drop from its highest price of $108,100, which occurred on December 17, 2024. This drop came after Bitcoin’s price had surged by 61% following the US election results on November 6, 2024, which created a positive outlook for the market.
Though some analysts had expected a larger price drop in the first quarter, the report suggests that the selling pressure has mostly eased.
Declining Sell-Side Liquidity
A major reason for Bitcoin’s price movement is the decrease in the availability of Bitcoin for sale. A key metric called the Liquidity Inventory Ratio shows how long the current supply can meet market demand. This ratio has dropped sharply from 41 months in October to just 6.6 months now.
This drop mirrors previous periods when Bitcoin’s price surged, indicating less available supply when demand increases.
Miners, who usually sell Bitcoin to fund their operations, have also contributed to the current situation. After Bitcoin’s halving event in 2024, miner selling has decreased. Miner activity slowed down significantly since April 2024, and though it increased in November 2024, it’s still lower than before.
According to Bitfinex, miners are now holding onto their Bitcoin and making significant unrealized profits. This behavior has further reduced the supply available for sale, helping to push Bitcoin’s price up.
A Strong Start for 2025
The report also noted that Bitcoin is starting 2025 on a strong note, based on positive metrics from the blockchain. It said that the decreasing availability of Bitcoin for sale will continue to play an important role in Bitcoin’s price movements.
While the risk of a larger price drop still exists, the low levels of liquidity and miners’ confidence in holding Bitcoin suggest that the downward pressure has lessened, setting the stage for more potential price increases.
