Despite significant inflows into US spot bitcoin exchange-traded funds (ETFs), with over $1.5 billion added in the last three days alone and an unprecedented 18-day streak of positive inflows, btc price remains well below the highly anticipated $100,000 mark. The digital currency is trading at around $71,000, up 50% since the ETF's inception, but stops short of setting a new record.
Charles Edwards, CEO of Capriole Investments, shared his thoughts via a x.com/caprioleio/status/1798983708537733507″ target=”_blank” rel=”noopener nofollow”>mail on x addressing the community's burning question: “Why aren't we at $100,000 yet?” According to Edwards, the answer lies in several key factors beyond ETF inflows.
Why the price of bitcoin is not going up
Edwards notes that US spot ETFs have absorbed 200% of mined btc since their launch in mid-January, a clear indication of solid demand. Despite such aggressive accumulation, the price increase expected by many market observers has not materialized.
“The entry into bitcoin ETFs represents historically significant demand, however, we are seeing a counterbalance due primarily to the distribution of long-term holders,” Edwards explained. From an all-time high of 57% in December 2023, the proportion of the total btc supply held by long-term holders (those who hold it for more than 2 years) has decreased to 54%. This change translates to approximately 630,000 Bitcoins, around 300% of the year's total btc purchases by all US ETFs.
“This 3% change, while seemingly minor, represents substantial volume of bitcoin moving from the strongest hands in the market to potentially more speculative or short-term-oriented investors,” Edwards noted. Furthermore, some of these sales are not pure exits from the market, but rather transitions from older investment vehicles, such as Grayscale's btc Trust, to newer ETF products, which may distort the perception of selling pressure.
Edwards also emphasized that the effects of the halving have not yet materialized. “With daily bitcoin issuance falling by 50% in April, we will likely see the delta between ETF consumption and mined bitcoin widen a lot over the next year. It also takes full quarters for institutions to review, approve and assign (in the best of cases). Therefore, major ETF flows are likely still ahead,” he stated.
Market timing and macroeconomic conditions further aggravate the situation. Edwards noted that June traditionally marks a pause in financial markets, including bitcoin and cryptocurrencies, as it aligns with a risk-averse sentiment among major asset managers. “Furthermore, since the bitcoin price peak in March, dollar liquidity has been relatively flat and even slightly negative. “This liquidity environment is crucial as it influences investors’ ability to inject capital into risky assets like bitcoin.”
Looking ahead, Edwards remains optimistic but cautious. He outlined three catalysts that could push the price of bitcoin to $100,000 and beyond: “Increased daily ETF purchase volumes, a decline in sales by long-term holders, and a rejuvenation of US liquidity are essential for a solid price appreciation. While these factors may coincide in the future, the exact timing remains uncertain.”
At the time of publication, btc was trading at $71,659.
Featured image from YouTube @Mark Moss, chart from TradingView.com
