Bitcoin's "Santa Rally" Eyes $120K as Key Metrics Shift Bullish

Summary:
Bitcoin is witnessing a price increase of 6.5% from recent lows, rekindling enthusiasm for a “Santa Rally” with targets reaching up to $120,000. With a predominance of short liquidations in the market, bullish momentum could continue. However, for a sustained recovery, it is crucial that Bitcoin’s price does not drop below $84,000.

Key Takeaways:

Bitcoin has increased by 6.5%, raising hopes for a "Santa Rally" that could see prices hitting $120,000.
The market is currently dominated by short liquidations, which could boost bullish trends.
Maintaining a price above $84,000 is essential for a stable recovery.

Bitcoin's latest rally has seen the cryptocurrency rise 6.5% from its recent lows, stimulating enthusiasm for a potential "Santa Rally" with ambitious targets as high as $120,000. Currently, short liquidations predominate, which can provide upward momentum for price increases. It is crucial for Bitcoin’s price to remain above $84,000 to ensure sustained recovery.

BTC/USD Daily Chart. Source: Cointelegraph / TradingView

Bitcoin’s “Santa Rally” Targets $120K as Key BTC Metric Flips Bullish

Bitcoin's Santa Rally Gains Momentum

Recent data compiled by Cointelegraph Markets Pro and TradingView indicated that BTC/USD soared to an intra-day high of $89,850, recovering from a local low of $84,400. Analyst AlphaBTC remarked on an X post that Bitcoin is “looking for a Santa Rally.” Accompanying charts hint that the ongoing recovery could push the BTC/USD pair higher—initially targeting the yearly opening price at $93,300 and subsequently aiming for resistance zones at $98,000 and $100,000.

BTC/USD Four-Hour Chart. Source: AlphaBTC

Fellow analyst Captain Faibik observed that Bitcoin may be on the verge of breaking out of a bullish megaphone pattern after experiencing a period of consolidation within a broad range of $82,000 to $95,000 since November 22. He noted, “The longer the consolidation lasts, the stronger and larger the rally that can be expected.” The target for this megaphone pattern is set at $120,000, indicating a potential 34% rally from current levels.

BTC/USD Eight-Hour Chart. Source: Captain Faibik

Despite optimistic forecasts, some analysts caution against assuming the “Santa Rally” will manifest, as projections suggesting BTC might reach six figures clash with warnings of a potential decline to $70,000. Notably, investor Ardi tracked the "Santa Rally" timeline (Dec 24 – Jan 2) over the past five years, noting a trend of diminishing returns and ongoing sell pressure, the 34.5% gains seen in 2020 being an outlier. His analysis, based on the 4-Year Cycle, indicated that “2025 finds itself in a similar post-halving context as 2021,” which recorded a -7.9% return during this interval.

BTC/USD Price Performance Over Holiday Season. Source: Ardi

Tactical Advantages in Bitcoin’s Derivatives Market

The current market landscape for Bitcoin reveals tactical upside potential, supported by a favorable structure in the derivatives futures market. According to analyst Axel Adler Jr. from CryptoQuant, the current regime score for Bitcoin stands at 16.3%, placing the BTC/USD pair in a historically bullish upper neutral zone.

Bitcoin Regime Score. Source: CryptoQuant

A key aspect favoring the bulls is the derivative liquidation structure. This indicates a notable prevalence of short position liquidations, which can lead to upward price pressure. The long/short liquidation dominance oscillator recently dipped to -11%, signaling an increase in forced closures of short positions, while its 30-day average continues to suggest positivity at 10%.

Bitcoin Futures Long Short Liquidations Dominance. Source: CryptoQuant

Crucial Support Level at $84,000

Bitcoin's price has successfully remained above the pivotal $84,000 level since it retested this mark on November 11. This price point is essential for traders and must be defended to prevent further downturns. Analyst Daan Crypto Trades emphasized that $84,000 is a critical area for bullish strategies in the long term.

BTC/USD Analysis by Daan Crypto Trades. Source: X/Daan Crypto Trades

Supporting data from Glassnode's cost basis distribution heatmap shows that immediate support rests between $84,000 and $85,600, where investors hold around 976,000 BTC. Maintaining prices above this level is vital for regaining momentum towards $100,000 or potentially higher.

Bitcoin Cost Basis Distribution Heatmap. Source: Glassnode

As previously reported by Cointelegraph, bearish forces are aiming to breach the $84,000 support, with their subsequent target being $80,000.