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The cryptocurrency market is expected to see an improvement in December as liquidity improves and selling pressure from long-term Bitcoin holders diminishes.
On December 5, the US crypto trading platform reported that market conditions have changed in recent weeks, citing new capital inflows, tight spreads and stronger economic support.
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Liquidity conditions improve as the possibility of a rate hike by the Federal Reserve increases
Bag in evidence to get up In the forecasts for a Fed rate cut, with CME FedWatch showing probabilities as high as 90% for the December 10 meeting.
The improvement in liquidity represents a sharp shift from outflows, he added The outdoor nature that characterized the months of October and November.
Broader money data show support for this hypothesis. Fed figures show M2 jumped to a record $22.3 trillion, hitting its peak in early 2022 after a rare multi-year contraction.
Analysts often follow M2 To understand liquidity changes and inflation expectations. Additionally, increased liquidity has historically been associated with strong Bitcoin performance, given the asset’s fixed supply of 21 million coins.
At the same time, Coinbase said that short positions in the dollar look attractive at current levels, which could attract more… Risk-averse investors in digital currencies.
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In addition, the company also argued that the business called AI still has momentum and continues to attract funds towards the digital sectors associated with the demand for automation and IT.
Long-term Bitcoin holders will stop selling
It should be noted that the indicators on the chain point in the same direction.
Darkfoust, a chain researcher at CryptoQuant, said: what you do Spending from Bitcoin wallets older than five years declined sharply after that Months of high activity from this group.
Note that the average daily sales by these long-term holders fell to around 1,000 BTC from around 2,350 BTC on a 90-day basis. This metric often indicates pressure from investors who have accumulated coins at historically lower price ranges, including around $30,000.
Darkfoust added that the decrease in UTXO and spent production activity indicates a decrease in pressure as the market cycle progresses. Thus, reducing the selling by the original “OG” holders gives Bitcoin more room to consolidate as well A fickle autumn.
“These data suggest that the selling pressure from the original holders has faded, giving the market more breathing room,” the analyst said. “It’s worth noting that their selling pressure appears to be easing as the cycle progresses, with lower STXO highs (90-day averages) from these holders.”
Improving liquidity, supportive macro indicators, and easing pressure on supply together set the stage for a stronger December. If the momentum continues, Bitcoin could post its first positive December close since 2023.
