Bitcoin struggled to hit $100,000. Why?
🔸 Plus: The most-viewed property on Rightmove is Jürgen Klopp’s McMansion 🔸 Your mint condition Band Aid vinyl is close to worthless 🔸 Goldman Sachs’ prediction for the UK in 2025 🔸
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The markets, year-to-date
S&P 500: 6,032.38 ⬆️ 27.19%
FTSE 100: 8,287.30 ⬆️ 7.33%
Bitcoin: $96,295.77 ⬆️ 117.84%
GBP to USD: $1.2733 ⬇️ 0.047%
GBP to EUR: €1.2034 ⬆️ 4.36%
(As of Friday market close.)
Why Bitcoin struggled to hit $100,000
It was Bitcoin’s big moment. On November 22, the price of a single Bitcoin reached $98,739 — just a few hundred dollars beneath the meaningless but psychologically interesting level of $100,000. People who owned crypto were checking the price every hour in hopes of seeing it crest above six figures.
The excitement around the $100,000 level should have driven increased interest in crypto, boosting the price. But despite the fanfare, despite the arrival of a crypto-friendly Trump Administration in the U.S., and despite countless “analyst reports” insisting that Bitcoin would soar far higher than $100K, Bitcoin flopped back into the mid-$90,000s.
The token lost nearly 7% of its value in just a couple of days.
Why?
The short answer is that more people sold Bitcoin than wanted to buy it.
It turns out that the Bitcoin market contains an internal contradiction. The higher it goes the more sellers want to sell. As Bitcoin approached $100K, a measurement called “the call-put skew” showed increasing interest among traders who wanted to place short bets against Bitcoin (i.e. to bet that the price would fall). Their predictions turned out to be correct: as Bitcoin approached the crucial threshold it faltered and fell back.
But, again, why?
This chart (below) has the answer. Somewhere in the region of 16 million Bitcoins (out of an existing total of about 19 million) are held long-term. “Long-term” is defined as more than 155 days, according to Bitcoin Magazine.
As Bitcoin approaches each new peak, these long-term holders decide to cash in. You can see the dips in their holdings at each price peak here:
In fact, the Bitcoin $100K non-event was the biggest-ever day of profit-taking by long-term holders in crypto history, according to Glassnode, an analytics company.
But, again — again — why?
If Bitcoin is going up, and you own Bitcoin, then why sell? Why not refuse to sell and get even richer?
One answer to this came from the investor Ben Carlson, who explained why he sold a bunch of Bitcoin before it broke the record. Basically, as a long-term holder, Bitcoin went up so much that it became a bigger part of his portfolio than he intended:
“I’m rebalancing. This one position is now nearly 10% of my entire portfolio. Outside of my total stock market index funds, Bitcoin is my largest single holding.”
“It’s time to trim and bring that position back to a more reasonable 5% or so of my portfolio.”
“Selling is an inexact science. I know there is nothing special about a big round number like $100,000 but the time seemed right to rebalance and right-size this position.”
Of course, it’s not simply that Bitcoin did so well that it unbalanced his portfolio. There’s nothing wrong with having big gains in your investments.
Rather, it’s the effect of Bitcoin’s volatility. Bitcoin trading is volatile, and moves of 7% or so are common. You don’t want your life savings to suddenly drop by 7% in a day, which is why pros like Carlson keep their crypto holdings to a small percentage.
And that, in turn, explains why so many holders of Bitcoin saw $100,000 as an opportunity to sell rather than buy.
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And for dessert …
The most-viewed property on Rightmove is Jürgen Klopp’s six-bedroom McMansion in Formby, Liverpool. It was previously owned by Steven Gerrard and Brendan Rogers. See all the photos here.
Kiera Knightley will encourage her daughters to go to university rather than be child acting stars.
Your vintage, mint condition, original 12-inch vinyl copy of Band-Aid’s “Do They Know It’s Christmas?” is probably worth … less than £10.
Here’s Goldman Sachs’ prediction for the UK economy in 2025: GDP to increase 1.2%, lower than the Bank of England’s projection of 1.5%.
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