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Bitcoin has reclaimed the $100,000 mark as 2025 begins, driven by strong market momentum and a tightening of sell-side liquidity.

According to the latest Bitfinex report, the Liquidity Inventory Ratio, a measure of how long the existing Bitcoin supply can meet demand, has dropped from 41 months in October to just 6.6 months.

This sharp decline reflects a significant tightening of Bitcoin’s available supply, indicating growing demand outpacing the sell-side liquidity.

The surge past $100,000 follows a remarkable 61% rally in late 2024, driven by optimism over Donald Trump’s election as the 47th US president.

Bitcoin reached an all-time high of $108,100 in December before experiencing a 15% correction, only to recover strongly as sell-side pressures eased.

A key factor in this trend, according to Bitfinex, is miners’ reduced activity, with miner-to-exchange flows now at multi-year lows.

The 2024 halving reduced rewards, prompting miners to hold their BTC amid favorable market conditions, tightening supply and supporting prices.

Adding to the analysis, CryptoQuant’s metrics indicate the crypto market is entering the later stages of the current bull cycle, which began in January 2023.

Analyst CryptoDan notes that 36% of Bitcoin’s supply has been traded within the past month, a sign of increased market activity.

While this figure is lower than previous cycle peaks, it indicates that the market is likely nearing its zenith, with a peak expected by Q1 or Q2 2025.

However, CryptoDan cautions against overexuberance, emphasizing the risks of market overheating as it approaches the peak.

“Substantial gains in Bitcoin and altcoins are still possible, but risk management is key at this stage. I plan to gradually sell my holdings,” he explained.

Bitcoin’s resurgence to $100,000 is also supported by broader macroeconomic trends. The US labor market ended 2024 on a strong note, bolstering risk-on asset demand.

However, uncertainties in sectors such as manufacturing and construction present mixed signals, adding a layer of complexity to market sentiment.

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