- Bitcoin Exchange-Traded Funds (ETFs) have witnessed an impressive influx of over $1.5 billion within the last three days, demonstrating strong investor interest.
- Despite these substantial inflows, Bitcoin’s price remains at approximately $71,000, not reaching the anticipated milestone of $100,000.
- Charles Edwards, CEO of Capriole Investments, provides insights into why Bitcoin is underperforming despite high ETF demand.
Discover why Bitcoin’s price struggles to hit $100,000 despite robust ETF inflows and understand the factors influencing market dynamics.
Why The Bitcoin Price Isn’t Rallying Higher
Edwards highlights that since the launch of US spot ETFs in mid-January, these ETFs have purchased 200% of the Bitcoin mined during this period, indicating substantial demand. Nevertheless, the anticipated price increase hasn’t occurred.
“The inflow into Bitcoin ETFs signifies historic demand, yet we are experiencing a counterbalance mainly due to long-term holder distribution,” Edwards explained. The portion of Bitcoin held by long-term investors (those holding over two years) dropped from 57% in December 2023 to 54%, indicating a shift of approximately 630,000 Bitcoins – almost three times the total Bitcoin purchases by all US ETFs this year.
“This 3% change, although appearing minor, represents a significant volume of Bitcoin transitioning from long-term holders to potentially more speculative, short-term investors,” stated Edwards. Furthermore, some sales represent a shift from older investment platforms like Grayscale’s BTC Trust to newer ETF products, which can skew perceived selling pressure.
The Halving Impact and Market Conditions
Edwards also notes that the effects of the April halve, which reduced daily Bitcoin issuance by 50%, are yet to be fully realized. “This reduction will likely increase the gap between ETF consumption and Bitcoin mining over the next year,” he suggested. Additionally, institutional processes for reviewing and allocating investments take time, meaning significant ETF flows are potentially on the horizon.
Moreover, market timing and broader macroeconomic conditions add to the complexity. Edwards mentions June as a traditionally slow period for financial markets, including cryptocurrencies, due to conservative strategies from major asset managers. “Furthermore, since March, the liquidity in USD has been somewhat stagnant or slightly negative, influencing investor capacity to invest in risk assets like Bitcoin,” he elaborated.
Conclusion
Looking forward, Edwards remains cautiously optimistic. He identifies three key drivers that could propel Bitcoin to $100,000 and beyond: increased daily buying volumes from ETFs, a reduction in selling from long-term holders, and an improvement in US liquidity. However, the precise timing of these alignments remains unpredictable.
Currently, Bitcoin trades around $71,659, reflecting a robust yet constrained market sentiment.
