In a recent discussion, famous cryptocurrency analyst Charles Edwards clarified why Bitcoin has not yet reached the $100,000 mark.
Edwards began his analysis by highlighting the important role of US Bitcoin ETFs. Since their launch in mid-January, these ETFs have achieved a staggering 200% acquisition of new Bitcoin mined. Even though the price of Bitcoin has increased by 50% to $71,000 since the inception of ETFs, many people are wondering why the price has not risen further.
Edwards noted a formidable force the market is currently struggling with: the selling of long-term wallets. The share of 'Hodlers' who have held Bitcoin for more than 2 years in the total supply has fallen from an all-time high of 57% in December 2023 to 54% today. While a drop of 3 may not seem significant, it amounts to approximately 630k BTC, or roughly 300% of the total amount purchased by all Bitcoin ETFs in the US this year.
As seen in previous cycles, selling on price appreciation is typical behavior, Edwards said. A large portion of this selling is changing hands from Grayscale's ETF to new ETFs, exaggerating the decline.
Edwards then turned his attention to the yet-unseen effects of the BTC halving. With daily BTC issuance falling by 50% in April, he predicts that the delta between ETF consumption and Bitcoin issued will widen next year. He also noted that institutions' review, signing and allocation process continues throughout the quarters, suggesting that major ETF inflows are likely still ahead.
Another key factor to consider, according to Edwards, is the time of year it is. June is typically a period of lull in the market and a risk-off period for many large asset managers.
Perhaps the most important factor, according to Edwards, is that USD Liquidity has remained flat and slightly negative since the Bitcoin peak in March. When the liquidity spigot turns off, risk assets face an uphill battle.
Edwards believes that for a strong price increase we should expect at least one of the following:
- Higher average daily ETF purchases
- Lower long-term wallet sales
- Growth in US liquidity
Edwards ends his analysis on an optimistic note, expecting these conditions to materialize in the coming months, potentially paving the way for Bitcoin to reach the elusive $100,000 mark.
*This is not investment advice.