Bitcoin could surge to $56,000 by December 31, maintaining its historical pattern of bullish momentum in the final months of the year, as forecasted by crypto services provider Matrixport.

A Bullish Momentum

Markus Thielen, Head of Research and Strategy at Matrixport, noted that if Bitcoin is up by at least +100% by this time of the year, there’s a +71% chance that it will finish the year on a higher note. He likens this trend to Bitcoin’s version of a “Santa Claus Rally,” which typically culminates by December 18th, encompassing the six to seven weeks from early November to mid-December.

As of the present, Bitcoin is trading above $35,000, reflecting a remarkable 114% gain year-to-date. Several factors contribute to this impressive rise, including optimism surrounding a spot ETF, speculation about the Federal Reserve’s liquidity tightening cycle reaching its peak, and increased demand from investors.

Optimistic Projections

Matrixport‘s analysis suggests that Bitcoin could experience a 65% price surge by year-end, potentially pushing it beyond $65,000. This positive outlook is based on historical data, where in seven out of the past 12 years, Bitcoin recorded at least 100% gains in the first 10 months, followed by an average 65% increase in the final eight weeks.

If Bitcoin is up at least +100% by this time of the year, then there is a +71% it will rally further by 65% or more by Dec. 31 

Thielen’s analysis also highlights that when Bitcoin has increased by at least +50% by the end of October, there is, on average, a 78% likelihood that it will continue to rise further into the year-end. In seven out of nine previous instances, Bitcoin saw an additional +68% gain until the year’s end. These conclusions are based on thirteen years of Bitcoin’s historical data.

It’s important to note that past performance does not guarantee future results, but given the upcoming bullish mining reward halving early next year, the likelihood of history repeating itself remains high. As Bitcoin continues to exhibit strong upward potential, the possibility of a $56,000 price point by the end of the year appears feasible.

In October, the crypto market saw a significant surge, with Bitcoin (BTC) leading the charge. Bitcoin’s value jumped more than 27%, reaching a 17-month high of $35,000, after hovering around $27,000 earlier in the month. This rally was largely attributed to growing optimism surrounding the potential approval of Bitcoin ETFs in the United States.

The collective market capitalization of all cryptocurrencies also rose nearly 19% to $1.255 trillion, the most substantial increase since January.

Bitcoin ETFs and Their Impact

Bitcoin ETFs hold great promise for the cryptocurrency, as they provide an accessible way for average investors to enter the market. The rejection of Grayscale Bitcoin Trust‘s (GBTC) conversion into an ETF was challenged in court, increasing the likelihood of SEC approval for such products, and potentially opening doors for other ETF applications.

While the overall crypto market experienced gains, not all sectors benefited equally. The CoinDesk DeFi Index (DCF), which covers decentralized finance-related tokens, posted a modest 7% gain. Ethereum’s Ether (ETH) had a 7% increase, while the CoinDesk Computing Sector (CPU), focused on Web3 infrastructure and distributed computing, surged by almost 32%.

Crypto sector returns in October (CoinDesk)

Solana (SOL) was a standout performer with a remarkable 70% monthly return, driven by increased network activity and reduced concerns about token sales.

Factors Behind the Rally

Investor excitement about potential Bitcoin ETFs in the U.S. played a significant role in the October rally. Analysts anticipate ETF approvals by December, and rising BTC derivatives funding rates indicated traders “panic bought” to join the rally. Sector-specific momentum, short liquidations, and macroeconomic factors also contributed to the price increase, according to CoinMetrics.

BTC rallied in October on a confluence of catalysts (CoinMetrics)

Following its impressive October performance, analysts believe Bitcoin still has room to grow. Some foresee a target of $40,000 shortly. Despite the exuberant sentiment, Bitcoin’s upward momentum is expected to persist, making it a cryptocurrency to watch in the coming weeks.

Crypto enthusiasts are on the edge of their seats as Bitcoin teases a potential surge. Alex Thorn, Head of Firmwide Research, suggests that a pivotal moment is approaching, with Bitcoin’s price eyeing the $35,750 to $36,000 resistance level. Thorn emphasizes the importance of this price zone, as it represents a key liquidation barrier closely monitored by derivatives traders.

Bullish Momentum Awaits a Breakthrough

Should the bulls gain the upper hand and breach this resistance, the crypto market may experience a significant uptick in demand. Thorn draws parallels between the current Bitcoin setup and the explosive events of the past week. While Bitcoin’s current spot rates remain stable, they hover around 2023 highs, with buyers anticipating further gains amid improving market sentiment.

Bitcoin price on October 30| Source: BTCUSDT on Binance, TradingView

While many are fixated on the potential approval of a spot Bitcoin Exchange-Traded Fund (ETF) by the United States Securities and Exchange Commission (SEC) as a catalyst for the next rally, Thorn has his eyes firmly fixed on the derivatives market. According to his analysis, options traders will play a pivotal role in driving the next bull run.

The $36,000 Threshold Explained

Thorn’s assessment suggests that once Bitcoin breaches the $35,750 to $36,000 zone, options dealers will need to purchase $20 million worth of spot BTC for every 1% increase in price. This surge in spot BTC buying stems from the need for options dealers to maintain a “delta neutral” position following a “gamma squeeze,” which previously drove prices higher.

Bitcoin gamma profile|Source: Alex Thorn on X

A gamma squeeze occurs when a surge in call (buy) options purchases compels options dealers, primarily market makers, to buy the underlying asset, which, in this case, is Bitcoin. This buying is done to hedge their positions and maintain a delta-neutral stance. The technical analysis points towards a potential gamma squeeze due to the current setup and trends, particularly in the daily chart.

Mixed Metrics, but a Healthy Position

Thorn also observes a discrepancy in the supply held by speculators and long-term holders, indicating potential dwindling on-chain liquidity. However, the Z-Score ratio of market price to realized price paints a positive picture, suggesting that Bitcoin is in a “healthy” position.

As of October 30, Bitcoin is in a bullish breakout formation, with traders exhibiting strong bullish sentiment. The sustainability of this upward trend hinges on whether buyers can push the coin past recent highs, keeping it clear of the breakout level around $32,000. Crypto enthusiasts eagerly await the outcome as Bitcoin stands at the precipice of a potentially remarkable bull run.

Bitcoin has experienced a positive week of trading, with the cryptocurrency managing to defend the $34,000 level after a brief slip below it. While Bitcoin remains a dominant force in the market, several altcoins have shown notable strength, including Chainlink, Aptos, and Cardano.

BTC’s Resilient Week

Bitcoin‘s favorable week began with the cryptocurrency decisively reclaiming the $30,000 level on Monday. The positive momentum continued, leading to a substantial price surge, pushing Bitcoin to its highest price in approximately a year and a half, reaching $35,200. Speculation about the potential approval of BlackRock‘s spot Bitcoin ETF application and an intriguing ticker symbol mystery contributed to the bullish sentiment, pushing the Fear and Greed index into a deep ‘greed’ territory. Although Bitcoin retraced slightly after reaching the multi-month peak, it made a strong recovery on Thursday, testing $35,000 once again. However, it faced resistance at this level and subsequently dipped below $33,500.

BTCUSD. Source: TradingView

Despite the setback, Bitcoin swiftly bounced back and is currently trading just above $34,000. Its market capitalization has decreased to $665 billion, and its dominance in the altcoin market has slightly declined to 52.9%.

Altcoin Performance

In contrast to Bitcoin’s minor fluctuations, several altcoins have displayed noteworthy movements. TONcoin and Dogecoin are among the larger-cap altcoins that have seen daily declines of 2-3%.

On the positive side, Ethereum (ETH), Binance Coin (BNB), TRON (TRX), Polygon (MATIC), Polkadot (DOT), and Litecoin (LTC) have posted minor gains. Cardano (ADA) has experienced a 3.6% increase and is trading close to $0.3, while Chainlink (LINK) has surged by over 5% and is trading above $11. Other altcoins, such as Aptos (APT) with a 6% gain, NEAR (5.5%), Internet Computer (ICP) with 3.5%, and VeChain (VET) with 2.5%, have also seen notable price increases.

Cryptocurrency Market Overview. Source: Quantify Crypto

The total market capitalization has remained relatively stable, hovering around $1.25 trillion. This week has seen a dynamic interplay between Bitcoin’s resilience and the promising performances of various altcoins.