Understanding Bitcoin's Price Dynamics

Cryptocurrency expert and Capriole Investments founder, Charles Edwards, recently discussed the challenges Bitcoin is facing in reaching the $100,000 milestone. Despite the introduction of spot Bitcoin ETFs in the US and a notable price increase since January, Bitcoin struggles to surpass the $71,000 mark. Edwards highlighted various reasons for this stagnation.

Why Bitcoin Struggles to Gain Momentum

One of the key issues hindering Bitcoin's price surge is the selling pressure from long-term investors. Edwards pointed out a significant decline in the number of wallets holding Bitcoin for more than two years, dropping from 57% in December 2023 to 54% today. This decrease, equivalent to 630,000 BTC, is three times the amount acquired by US ETFs in the same period. This trend indicates that long-term holders are divesting their assets, adding to the downward pressure on prices.

The Impact of Halving on Bitcoin's Price

Edwards also discussed the delayed response of the market to Bitcoin's block reward halving in April, which reduced the cryptocurrency's daily issuance. He anticipates a widening gap between BTC purchases by ETFs and the new issuance, signaling a potential supply shock. Financial institutions are expected to take their time to evaluate the market and allocate funds for Bitcoin investments, with spot ETFs likely to remain significant buyers of BTC throughout the year.

Critical Factors for Bitcoin's Price Surge

According to Edwards, three crucial factors are vital for a substantial increase in Bitcoin's price:

• Increased daily ETF purchases: Sustained demand for Bitcoin is reliant on heightened average daily ETF purchases.
• Decreased selling pressure from long-term holders: A reduction in the number of BTC available for sale due to long-term holders selling off their assets.
• Growing US liquidity: More investment capital flowing into Bitcoin from the US market is crucial for price growth.

These essential factors collectively create an environment conducive to Bitcoin's price appreciation, ensuring steady and robust growth.