Bitcoin (BTC) Analysis: Price Dips 3% as Spot Demand Surges, Correction Ahead?

Bitcoin (BTC) traded at $103,944 at press time, showing a 3.28% decline in the past 24 hours but a 6.77% gain over the last week. 

With a circulating supply of 20 million BTC, Bitcoin’s market cap stands at approximately $2.06 trillion. Spot market demand remains strong, even as futures market activity shows a slight decline.

Futures Market Sees a Slight Dip

Data from Coinglass shows Bitcoin futures open interest dropped 0.83% to $68.43 billion. The decline suggests a pause in futures market activity, likely driven by traders taking profits or unwinding positions.

Despite this dip, the overall open interest remains at historically high levels, reflecting continued interest in the market. Over the past year, futures open interest has seen steady growth, with a sharp increase in late October and November. 

This aligns with significant moves in Bitcoin’s price, indicating active participation from both institutional and retail traders.

Meanwhile, Bitcoin options open interest rose 1.60% to $42.06 billion, while options volume fell 26.32% to $2.86 billion. The divergence shows that traders may be shifting their focus or hedging strategies as market conditions evolve.

Spot Market Demand Takes Center Stage

Spot market activity has emerged as the dominant driver of Bitcoin’s current upward trend. Analysts note that buying pressure in the spot market continues to grow, even as futures activity shows signs of slowing.

According to CryptoQuant analyst @avocado_onchain, “While futures market activity has declined, spot market demand continues to increase. This suggests that speculative excess in the futures market is cooling while buying pressure in the spot market is gaining strength.”

Spot Market Demand Takes the Lead as Bitcoin Continues Its Upward Momentum

“While futures market activity has declined, spot market demand continues to increase. This suggests that speculative excess in the futures market is cooling, while buying pressure in the spot market is… pic.twitter.com/M4o4TsG02V

— CryptoQuant.com (@cryptoquant_com) December 17, 2024

This trend signals sustained interest from long-term investors looking to hold Bitcoin directly, rather than trade with leverage.

Profit-Taking Among Short-Term Holders

On-chain data reveals that short-term holders have been actively booking profits as Bitcoin surpassed the $100,000 mark. Analytics platform Santiment reported increased selling among holders who purchased Bitcoin between 90 and 365 days ago.

In contrast, long-term holders, who accumulated BTC in the $90,000–$100,000 range, have shown reduced activity. This suggests long-term investors are holding onto their positions, while short-term traders capitalize on recent gains.

Possible Price Correction Ahead

Historical trends indicate that Bitcoin may experience a price correction soon. Analysts point to patterns from previous bull cycles where Bitcoin saw retracements during similar phases of price discovery.

Crypto analyst Rekt Capital explained, “In 2013, Bitcoin experienced a pullback during Week 7 of price discovery. In 2017, the cryptocurrency retraced by 34% in Week 8, and in 2021, Bitcoin saw a 16% decline in Week 6.”

If Bitcoin follows these patterns, a retracement could push prices back below $100,000. Analyst Ali Martinez shared a similar outlook, saying, “If Bitcoin behaves like in 2017 and 2020, then there will be a brief correction after reaching $110,000, a steep correction after hitting $125,000, a big correction at $150,000, and the end of the bull market at $220,000!”

As Bitcoin moves through its seventh week of price discovery, analysts expect a potential correction in the near term. While short-term profit-taking has increased, strong spot market demand continues to support prices.

FAQs:

Why is Bitcoin’s price declining despite strong demand?

Bitcoin’s price has dipped due to profit-taking by short-term holders, even as spot market demand remains strong.

What is the current trend in Bitcoin futures and options markets?

Bitcoin futures open interest declined slightly by 0.83%, while options open interest rose by 1.60%. Options volume, however, fell 26.32%.

Could Bitcoin’s price fall below $100,000 in the near future?

Yes, analysts warn that historical patterns suggest a short-term correction could push Bitcoin back below $100,000.