Why Bitcoin Struggles to Reach $100,000 Despite ETF Developments

Why Bitcoin Struggles to Reach $100,000 Despite ETF Developments

Bitcoin, often hailed as the market leader in the cryptocurrency realm, has been facing hurdles on its path to reaching the anticipated price surge to $100,000. Charles Edwards, founder of Capriole Investments, sheds light on one of the primary factors hindering this milestone – the sale of Bitcoin by long-term holders. Edwards’ analysis reveals a decline in wallets holding Bitcoin for over two years, dropping from an all-time high of 57% in December 2023 to 54%. While a 3% decrease may seem insignificant, it translates to approximately 630,000 BTC – a quantity surpassing the amount purchased by US Bitcoin ETFs since January. This continuous sell-off by long-standing investors exerts downward pressure on the price of Bitcoin.

In addition to the issue of long-term holders selling their Bitcoin, Edwards also points out that the market has not yet fully experienced the effects of Bitcoin’s halving event in April, which slashed the daily issuance of Bitcoin by 50%. This halving event signifies a reduction in the rate at which new Bitcoins are created and added to the circulating supply. Edwards believes that the gap between the amount of Bitcoin acquired by spot ETFs and the decreased output from mining activities will widen significantly in the coming days. Financial institutions are urged to adjust their strategies to accommodate these changes and continue leading in Bitcoin acquisitions.

Edwards identifies three crucial factors that are essential for a substantial rise in Bitcoin’s price: increased daily ETF purchases, reduced selling by long-term holders, and an expansion in U.S. market liquidity. Despite trading at $71,926 with modest movements, Bitcoin is struggling to exhibit any significant price increase in the past 24 hours, even with a 4.9% uplift over the last 7 days.

While Charles Edwards has outlined reasons behind Bitcoin’s failure to reach the $100,000 mark, other experts delve into the reasons why substantial inflows into spot Bitcoin ETFs have not triggered a corresponding price surge. Seasoned crypto trader Christopher Inks emphasizes the intricate interplay of spot trading, futures, options, and ETFs in influencing the Bitcoin market. Inks suggests that focusing solely on ETF activities does not provide a comprehensive view of the market dynamics. Analysts like Eric Balchunas echo similar sentiments, highlighting that the stagnant price despite ETF purchases could be attributed to existing Bitcoin holders selling their holdings, counteracting the buying pressure from ETFs.

Further discussions among financial experts illuminate the multifaceted nature of the Bitcoin market. Analyst Eric Balchunas suggests that the lack of price movement despite ETF purchases may be due to the selling activities of existing Bitcoin holders, which balances out the buying pressure from ETFs. Another expert, Jimie, explains that while ETFs contribute to market activity, they represent a small fraction of the total Bitcoin circulation. Most of the Bitcoin is controlled by large holders, referred to as “whales,” whose trading actions could outweigh the impact of ETF buying. This dynamic suggests that significant buying by ETFs often encounters substantial selling, thereby maintaining price equilibrium in the market.

The journey towards Bitcoin reaching the coveted $100,000 price mark is marred by various challenges, including the sell-off by long-term holders, the ramifications of Bitcoin’s halving event, and the delicate balance between ETF purchases and selling activities of large holders. As the cryptocurrency market continues to evolve, it is essential for investors and institutions to adapt their strategies to navigate through these complexities and seize opportunities for growth and sustainability in the volatile world of digital assets.


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