Bitcoin Stall Below $100,000 Despite ETF Surge: Fund Manager

Despite $1.5B inflows in 3 days, Bitcoin trades at $71K, up 50% but below $100K. Long-term holder shifts and macro factors contribute, says Capriole CEO.

Even though US spot Bitcoin Exchange-Traded Funds (ETFs) have seen significant inflows—more than $1.5 billion has been added in the last three days alone, and there have been a historic 18 days of positive inflows—the price of BTC is still significantly below the much-anticipated $100,000 threshold. The digital currency is trading at over $71,000, up 50% from the ETFs’ launch price but not quite a new high.

The CEO of Capriole Investments, Charles Edwards, offered his thoughts in a post on X that addressed the community’s pressing query: “Why aren’t we at $100,000 yet?” Edwards asserts that the solution depends on several essential variables and ETF inflows.

The Reasons Behind The Bitcoin Price’s Decline

Edwards highlights that since their inception in mid-January, US spot ETFs have absorbed 200% of the BTC mined, a clear sign of solid demand. Even with this active accumulation, many market observers expected a price spike, but it hasn’t happened.

The demand for Bitcoin ETFs is historically high, but long-term holder distribution is mostly to blame for the imbalance that has been observed, according to Edwards. Long-term holders (those who have held BTC for two years or longer) now hold 54% of the total supply, down from an all-time high of 57% in December 2023. This change corresponds to nearly 630,000 bitcoins or roughly 300% of the entire amount of BTC that all US ETFs have purchased this year.

According to Edwards, “this 3% shift—while seemingly insignificant—represents a significant volume of Bitcoin shifting from the market’s strongest hands to possibly more speculative or short-term oriented investors.” Furthermore, a portion of this selling is not a straightforward market departure but rather a switch from more traditional investment vehicles like Grayscale’s BTC Trust to more recent ETF offerings, which could skew the appearance of selling pressure.

Edwards also underlined how the implications of the halving still need to be fully apparent. We anticipate a significant increase in the gap between the amount of Bitcoin generated and the amount of ETFs used over the upcoming year, given that the daily issuance of Bitcoin fell by 50% in April. Institutions also need complete quarters to evaluate, approve, and distribute (at most). Therefore, the significant ETF flows are probably still in front of us,” he said.

The scenario is made much more complicated by macroeconomic factors and market timing. According to Edwards, June typically saw a slowdown in the financial markets, including Bitcoin and other cryptocurrencies, because significant asset managers tend to be risk-averse at that time. “Moreover, USD liquidity has been essentially unchanged, if not slightly negative, since the top of the price of Bitcoin in March. The liquidity environment impacts investors’ willingness to invest in riskier assets like Bitcoin, which makes it crucial.

Edwards is cautiously optimistic about the future. He listed three potential drivers of Bitcoin’s price growth that might push it above $100,000: Robust price appreciation requires a reduction in selling by long-term holders, a resurgence of US liquidity, and higher daily purchasing volumes from ETFs. Although the precise date is unknown, these elements may align.

Bitcoin was trading at $71,659.