7 June 2024
Bitcoin continues to be the market leader. However, despite significant developments, such as the introduction of spot Bitcoin Exchange-Traded Funds (ETFs), the anticipated price surge to $100,000 remains ‘unrealized.’
Charles Edwards, founder of Capriole Investments, commented on this and took to Elon Musk’s social media platform X to explain the hurdles preventing Bitcoin from achieving this milestone.
Examining Bitcoin’s Stagnation Below $100k
According to Edwards, one of the primary factors is the sale of Bitcoin by long-term holders. His analysis shows a decline in wallets holding Bitcoin for over two years, from an all-time high of 57% in December 2023 to 54%.
Although this 3% drop might seem minor, it represents about 630,000 BTC—far exceeding the quantity purchased by US Bitcoin ETFs since January. This sell-off by long-standing investors is exerting downward pressure on the price.
Edwards also pointed out that the market has yet to fully feel the impact of Bitcoin’s halving event in April, which reduced the daily issuance of Bitcoin by 50%.
We haven’t seen the impacts of the Halving yet.
With the daily Bitcoin issuance dropping by 50% in April, we will likely see the delta between ETF consumption and Bitcoin mined widen a lot over the next year. It also takes full quarters for institutions to review, sign-off 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 output from mining will widen significantly, underscoring the need for financial institutions to adjust their strategies and continue leading in Bitcoin acquisitions.
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 in U.S. market liquidity.
BTC Price Slow Amid Record ETF Inflows
Bitcoin trades at $71,926, showing modest movements as it struggles to mark any price increase over the past 24 hours, despite a 4.9% rise in the last 7 days.
While Charles Edwards has detailed reasons behind Bitcoin not reaching the $100,000 milestone, other experts are analyzing why substantial inflows into spot BTC ETFs have not translated into a corresponding price surge.
Experts believe that various factors muffle ETFs’ influence on Bitcoin’s price. Seasoned crypto trader Christopher Inks points out that a complex interplay of spot trading, futures, options, and ETFs influences the Bitcoin market.
Inks stresses that an exclusive focus on ETF activities does not provide a complete view of the market dynamics. Responding to a user query on X about the stagnant price despite ETF purchases, Inks remarked, “You do realize the market is made up of spot, futures, ETFs, and options, right? Price at any point in time is a product of all of these, not just one of them..”
Further discussions among financial experts illuminate the multifaceted nature of the BTC market. Analyst Eric Balchunas suggests that the lack of price movement despite ETF purchases might be due to existing Bitcoin holders selling their holdings, which balances out the buying pressure from ETFs.
I’ve said it before and I’ll say it again, the call is coming from inside the house holmes. This is not ETFs doing, obv bc they buying like crazy lately, it’s bitcoin holders selling or leveraged flushers or whatever. Time and again ETFs go on flow-a-thons and its met with… 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 the total Bitcoin circulation.
Jimie added that the majority is controlled by large holders (“whales”), whose trading activities could overpower the influence of ETF buying. This dynamic indicates that significant buying by ETFs often meets with heavy selling, maintaining price equilibrium.
Featured image created with DALL-E, Chart from TradingView