Bitcoin remains the market leader. However, despite significant developments such as the introduction of spot Bitcoin Exchange-Traded Funds (ETFs), the expected price increase to $100,000 remains ‘unrealized’.
Commenting on the matter, Charles Edwards, founder of Capriole Investments, took to Elon Musk’s social media platform to explain the hurdles preventing Bitcoin from reaching this milestone.
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Investigating the stagnation of Bitcoin under $100,000
According to Edwards, one of the most important factors is the selling of Bitcoin by long-term holders. His analysis shows a decline in the number of wallets holding Bitcoin for more than two years, from an all-time high of 57% in December 2023 to 54%.
While this 3% drop may seem small, it represents approximately 630,000 BTC – far more than the amount purchased by US Bitcoin ETFs since January. This sell-off by established investors puts downward pressure on the price.
Edwards also pointed out that the market has yet to fully feel the impact of Bitcoin’s halving in April, which saw Bitcoin’s daily issuance drop by 50%.
We have not yet seen the consequences of the halving.
With daily Bitcoin issuance down 50% in April, we are likely to see the delta between ETF consumption and Bitcoin mined become much larger in the coming year. It also takes full quarters for institutions to complete the assessment, signing and… pic.twitter.com/bAxfFzv6L8
— Charles Edwards (@caprioleio) June 7, 2024
He believes that the gap between the amount of Bitcoin purchased by spot ETFs and the reduced production from mining will widen significantly, underscoring the need for financial institutions to adapt their strategies and remain at the forefront of acquisition of Bitcoin.
Meanwhile, Edwards identified three key factors that he believes are essential for a sharp rise in Bitcoin’s price: increased daily ETF purchases, reduced selling by long-term holders and an expansion of liquidity in the US market.
BTC Price Sluggish Amid Record ETF Inflows
Bitcoin is trading at $71,926, showing modest moves as it struggles to mark a price increase in the past 24 hours despite rising 4.9% in the past 7 days.
While Charles Edwards has detailed reasons why Bitcoin isn’t hitting the $100,000 mark, other experts analyze why substantial inflows into spot BTC ETFs haven’t translated into a corresponding price increase.
Experts believe that several factors dampen the influence of ETFs on the price of Bitcoin. Seasoned crypto trader Christopher Inks points out that a complex interplay of spot trading, futures, options and ETFs influences the Bitcoin market.
Inks emphasizes that an exclusive focus on ETF activities does not provide a complete picture of market dynamics. In response to a question from a user on Price at any time is a product of all of these factors, not just one of them.”
Further discussions among financial experts highlight the multi-faceted nature of the BTC market. Analyst Eric Balchunas suggests that the lack of price movement despite ETF purchases could be due to existing Bitcoin holders selling their holdings, offsetting ETF buying pressure.
I’ve said it before and I’ll say it again: the call comes from inside the house. This isn’t what ETFs do because they’ve been buying like crazy lately, they’re bitcoin holders selling flushers or leveraged or whatever. Time and time again, ETFs go on flow-a-thons and it faces… https://t.co/iuGNayrLgd
— Eric Balchunas (@EricBalchunas) June 6, 2024
Another expert, Jimie, explains that while ETFs contribute to market activity, they represent a small portion of total Bitcoin circulation.
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Jimie added that the majority are controlled by large holders (“whales”), whose trading activities could overwhelm the influence of ETF purchases. This dynamic indicates that significant buying by ETFs is often accompanied by heavy selling, maintaining price equilibrium.
Featured image created with DALL-E, Chart from TradingView