Cryptocurrency analyst and founder of Capriole Investments, Charles Edwards, recently provided insight into Bitcoin‘s price behavior, explaining why it has not yet achieved the $100,000 mark and identifying fundamental factors that could drive its price higher in the coming months.
Why Is Bitcoin Struggling to Gain Momentum?
Despite the introduction of spot Bitcoin ETFs in the US and a 50% price increase since January, Bitcoin currently trades just above $71,000. Edwards outlined key issues, such as the selling pressure from long-term investors, which are preventing significant price gains.
Edwards pointed out that the number of wallets holding Bitcoin for more than two years has decreased from 57% in December 2023 to 54% today. This 3% drop equates to 630,000 BTC, which is triple the amount purchased by US ETFs since January. This indicates that long-term holders are liquidating their assets, contributing to downward price pressure.
How Will Halving Impact Bitcoin’s Price?
Edwards also noted the market’s delayed response to Bitcoin’s block reward halving in April, which halved the cryptocurrency’s daily issuance. He anticipates a widening gap between the amount of BTC purchased by ETFs and the amount issued, suggesting an impending supply shock.
Additionally, Edwards mentioned that financial institutions require time to evaluate the market and allocate funds for Bitcoin investments, indicating that spot ETFs will continue to be significant BTC purchasers throughout the year.
Critical Factors for Bitcoin Price Increase
Edwards identified three critical factors necessary for a strong Bitcoin price rise:
- Increased average daily ETF purchases to sustain demand for Bitcoin.
- Reduced selling pressure from long-term holders, decreasing the Bitcoin supply available for sale.
- Growth in US liquidity, which will provide more investment capital for Bitcoin.
These factors are essential to create a conducive environment for Bitcoin’s price ascent, ensuring robust and sustained growth.