- The cryptocurrency market is abuzz with optimism, anticipating a significant rise in Bitcoin’s value beyond $72,000 and reaching new all-time highs.
- Excitement is fueled by substantial investments in spot Bitcoin exchange-traded funds (ETFs).
- Charles Edwards, founder of Capriole Investments, identifies multiple factors restricting the uptrend to $100,000.
Discover why Bitcoin’s value remains capped below $100,000 despite recent bullish trends and significant institutional investments in spot ETFs.
Factors Restricting Bitcoin’s Rise to $100,000
In a detailed analysis, Edwards highlights a complex interplay of factors that are currently limiting Bitcoin’s ascent. Key among these is a tug-of-war between new institutional investments and selling pressure from long-term holders.
Within six months of the United States Securities and Exchange Commission (SEC) approving the initial batch of spot Bitcoin ETFs, billions of dollars have been funneled into these financial products.
According to Lookonchain, on June 6, nine spot BTC ETF providers in the United States collectively amassed 6,907 BTC, worth over $492 million. Notably, Fidelity acquired 3,104 BTC, and BlackRock purchased 2,186 BTC.
Institutional Investment Trends
Following substantial gains in May, institutional interest in Bitcoin has surged, with many opting for spot ETFs to gain exposure. Over the past six months, spot Bitcoin ETF issuers in the U.S. have aggressively accumulated BTC, purchasing approximately 200% of all Bitcoins mined since their introduction in January.
This robust institutional investment has driven Bitcoin prices higher, surpassing the 2021 highs and setting new records in March 2024.
Institutional Inflows, USD Liquidity, and Long-term Holder Dynamics
Despite the bullish trend, the pace of Bitcoin’s price increase remains subdued, largely due to substantial selling by long-term holders. Since a peak in December 2023, the proportion of Bitcoin held by long-term investors has decreased from 57% to 54%, equating to the sale of approximately 630,000 BTC. This figure surpasses the total Bitcoin holdings by all spot ETF issuers in the U.S.
Edwards suggests that for Bitcoin to test the $100,000 mark, there needs to be a significant uptick in institutional demand, potentially pushing daily purchases to over $1 billion.
Furthermore, the deceleration of liquidation by long-term holders is crucial. A surge in the M2 money supply in the United States, coupled with reduced selling pressure, could propel Bitcoin beyond its current trading range.
Conclusion
In summary, Bitcoin’s journey to $100,000 hinges on a delicate balance of increasing institutional investments, dampened selling by long-term holders, and favorable liquidity conditions. As these dynamics evolve, market participants remain cautiously optimistic about Bitcoin’s future trajectory.
