San Francisco, California — Bitcoin’s price has hovered between $100,000 and $110,000, raising questions among investors about the factors suppressing its growth. This stagnation comes despite significant inflows into exchange-traded funds (ETFs) and notable buying activity from major treasury firms.
During the second quarter of this year, ETF investments in Bitcoin skyrocketed to nearly $11 billion. Notable firms such as Metaplanet and Strategy have publicly announced large-scale Bitcoin purchases. Last week alone, ETFs acquired approximately 20,700 Bitcoins, accounting for about 12.6 percent of the total newly mined Bitcoin supply for the year, according to data.
Yet, many analysts are puzzled by the disconnect between the high demand for Bitcoin and its lackluster price performance. Charles Edwards, founder of Capriole Investment, pointed to long-term holders (LTH) as a significant influencer in the market. He noted that seasoned Bitcoin investors have been selling their assets since the launch of ETFs in January 2024, leading to increased selling pressure on the asset.
Data from Glassnode illustrates a rising trend among six-month holders, contrasting with the behavior of more established holders who have begun offloading their assets. Despite the significant purchases made through OTC (over-the-counter) desks, which often do not impact traditional order books or centralized exchanges, the overall demand has not translated into upward price momentum.
Analysts suggest that many older coins are being reactivated but are instead being traded OTC, which further clouds the market’s reaction. TXMC Trades highlighted that sales conducted through these desks do not significantly alter the price dynamics compared to trades made on traditional exchanges.
Further complicating matters, data shows a dramatic decrease in Bitcoin supply on OTC desks and reserves within centralized exchanges, dropping by 20 to 30 percent. This shrinking supply could eventually lead to a price squeeze in Bitcoin, providing a potential opportunity for resurgence.
Notably, influential figures in the financial world, like venture capitalist Chamath Palihapitiya, have made bold predictions regarding Bitcoin’s future. Palihapitiya recently suggested that Bitcoin could ascend to $500,000 by October, citing historical patterns following halving events.
However, historical trends also reveal that large holders—those possessing 10,000 Bitcoins or more—have been selling off their holdings over recent years, creating a complex landscape for retail investors. Notably, the number of whales holding over 1,000 Bitcoins decreased from 2,114 in late May to 2,008 by June but increased again in the final week of the month.
Retail interest appears to be declining as well, with engagement dropping around 10 percent, further complicating the upward potential for Bitcoin prices. As investors closely watch the market, the dynamics of buying and selling among long-term holders and institutional players remain pivotal in determining the future trajectory of this volatile cryptocurrency.