Bitcoin’s Stubborn Stand Below $100K: What’s Holding It Back?

As a researcher with experience in the crypto market, I believe that while Bitcoin’s stagnation below $100,000 is disappointing for many investors, it’s essential to understand the underlying factors preventing this milestone from being reached. Charles Edwards, founder of Capriole Investments, offers insightful perspectives on the issue, highlighting the role of long-term holders selling their Bitcoin and the impact of the halving event.

Despite advancements like the launch of spot Bitcoin ETFs, the predicted price jump to $100,000 has yet to materialize. Bitcoin still dominates the market.

Charles Edwards, the founder of Capriole Investments, shared his perspective on this matter through a post on Elon Musk’s social media platform, X, detailing the challenges that hinder Bitcoin from reaching the $1 trillion market capitalization mark.

Examining Bitcoin’s Stagnation Below $100k

As a seasoned crypto investor, I’ve come to appreciate Edwards’ insights into the market. One significant factor he highlights is the selling pressure brought about by long-term Bitcoin holders. His research reveals that the proportion of wallets holding Bitcoin for over two years has dropped noticeably, from a peak of 57% in December 2023 to the current 54%.

Bitcoin’s Stubborn Stand Below $100K: What’s Holding It Back?

Despite appearing insignificant with a 3% decrease, this amount translates to approximately 630,000 BTC – surpassing the total Bitcoin purchases made by US ETFs since January. The selling wave from long-term investors is significantly impacting the price trend in a downward direction.

As an analyst, I’d note that the Bitcoin market hasn’t fully absorbed the effects of the halving event that occurred in April. This significant reduction in the daily creation of new Bitcoins by half has yet to fully manifest in the market price and behavior.

We haven’t seen the impacts of the Halving yet.

The decrease in daily Bitcoin production by half in April is expected to significantly expand the gap between the amount of Bitcoin used in ETFs and the Bitcoin mined in the upcoming year. Additionally, institutional approval processes take three complete quarters to complete.

— Charles Edwards (@caprioleio) June 7, 2024

I hold the conviction that the disparity between the quantity of Bitcoin acquired through spot Exchange-Traded Funds (ETFs) and the decreased production from mining will expand substantially. This development underscores the importance for financial institutions to reassess their strategies and maintain their leading roles in Bitcoin accumulation.

During his analysis, Edwards pinpointed three crucial elements contributing to a significant surge in Bitcoin’s value: the escalating buying of ETFs on a daily basis, the decrease in disposal by long-term investors, and the broadening market liquidity in the United States.

BTC Price Slow Amid Record ETF Inflows

The current Bitcoin price hovers around $71,926, exhibiting subtle fluctuations, as it fails to register significant gains within the last day. However, it has experienced a modest 4.9% price surge over the past week.

Bitcoin’s Stubborn Stand Below $100K: What’s Holding It Back?

Although Charles Edwards provides valid explanations for Bitcoin failing to hit the $100,000 mark, other analysts focus on the mystery surrounding the lack of significant price increases following large investments in Bitcoin spot ETFs.

According to experts, several elements can dampen the impact of ETFs on Bitcoin’s pricing. As noted by experienced crypto trader Christopher Inks, the Bitcoin market is influenced by a intricate dance between spot trading, futures contracts, options, and ETFs.

As an analyst, I would emphasize that focusing solely on Exchange-Traded Fund (ETF) activities does not paint a comprehensive picture of market dynamics. In response to a user’s question regarding the stagnant price despite ETF purchases, I would explain, “You are aware that markets consist of spot, futures, ETFs, and options transactions, correct? The price at any given moment is influenced by all these components, not just ETF activities.”

Financial experts continue to debate the complexities of the Bitcoin market. According to analyst Eric Balchunas, an intriguing explanation for the absence of significant price changes following ETF purchases could be that Bitcoin owners are simultaneously selling their holdings, thus neutralizing the impact of new buying pressure from the ETFs.

I’ve made this observation before, and I’ll make it again: the recent selloff in bitcoin is not due to ETFs. Contrary to popular belief, they haven’t been selling en masse as they have been actively purchasing in large quantities lately. Instead, it’s likely that bitcoin holders are offloading their coins or leveraged traders are liquidating their positions. Time and again, we’ve seen ETFs go on buying sprees, but the market response has not always been positive.

— Eric Balchunas (@EricBalchunas) June 6, 2024

Jimie, another knowledgeable source, points out that even though Exchange-Traded Funds (ETFs) play a role in Bitcoin trading, they make up a minimal fraction of the overall Bitcoin supply.

As a researcher, I’ve discovered that the market’s majority is dominated by large-scale traders, whom we refer to as “whales.” Their trading actions can outweigh the impact of ETF purchases. This situation suggests that when ETFs make significant buys, they frequently encounter substantial selling, thus maintaining a balanced price equilibrium.

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2024-06-08 02:47