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Cryptocurrency analyst and founder of Capriole Investments, Charles Edwards, recently shared his views on why Bitcoin (BTC) has not yet reached the $100,000 level and what fundamental factors could drive its price up in the coming months.
Why Bitcoin Is Not Showing Expected Strength?
Despite the launch of spot Bitcoin ETFs in the US and a 50% price increase since January, Bitcoin is currently trading just above $71,000. Edwards highlighted key points by explaining the obstacles and potential catalysts for Bitcoin’s price rise.
Edwards emphasized that a significant obstacle to Bitcoin reaching $100,000 is the selling pressure from long-term investors. He noted that the number of wallets holding Bitcoin (for more than two years) has decreased from 57% in December 2023 to 54% today. While this 3% drop may seem small, it represents 630,000 BTC, which is three times the amount of Bitcoin purchased by US ETFs since January. This indicates that long-term holders are selling, which is driving the price down.
Another important factor mentioned by the founder of Capriole Investments is the impact of Bitcoin‘s block reward halving, which has not yet been fully recognized by the market. The fourth block reward halving event in April created a significant supply shock by reducing Bitcoin’s daily issuance by 50%. Edwards believes that the gap between the amount of BTC purchased by ETFs and the amount issued will widen significantly over the next year.
The founder of Capriole Investments also emphasized that financial institutions need time to assess the situation and allocate funds for Bitcoin purchases, which means that spot ETFs will continue to be major BTC buyers throughout this year.
Three Key Factors for Strong Bitcoin Price Rise
On the other hand, Edwards identified three key factors he believes are necessary for a strong Bitcoin price rise. The first is a higher average daily ETF purchase that can create sustained demand for Bitcoin. The second is a reduction in the selling pressure from long-term holders, which will decrease the supply of Bitcoin available for sale.
The third factor Edwards pointed to is the growth in US liquidity, which will provide more capital for Bitcoin investments.
