On days as of late where the stock market increased in price, Bitcoin (generally a risk-on asset) has not followed it, representing a disconnect with past behavior, and possibly signaling Bitcoin is near a top.
Currently sitting at just above $69,000 in order to convince investors it has more price run left.
After Bitcoin hit fresh all-time highs of $69,200 at the onset of March, it then fell to nearly $59,700. In mid-March it set a new all-time high of nearly $74,000, signaling a local top at this level.
During the drop to $59,7000, $1 billion left the markets. BlackRock’s Bitcoin ETF set trading records, including when it attracted $3.8 billion in volume. When the Bitcoin price tumbled open interest declined $1.46 billion (-12%) in just a few short hours.
At this point in the current cycle, however, Bitcoin price dips are shaking out overleveraged positions. The selling pressure in this range was likely the result of profit-taking at historical highs, not only from miners but also longer term whales.
For example, a whale from all the way back in 2010 sold 1000 Bitcoin, or $68M in an hour. On March 1, 2024, a bitcoin mega whale moved 2,000 bitcoins from 2010 sold four days later on March 5 when Bitcoin hit $69 million per coin. The same holder transferred 1,000 more 2010 bitcoins.
After touching it’s all time-high, Bitcoin declined leading to a market-wide sell-off. More than $1 billion worth of liquidations took place and Bitcoin fell to as low as $60,800 only to rebound to $67,000 in Asian morning hours.
The lasting and considerable demand for spot Bitcoin ETFs could send Bitcoin to $100,000 in rather short order. Moreover, a decision on spot Ether ETFs is expected by May 23 with major repercussions for that market and the broader crypto market.
Bitcoin’s short-term destiny is now tied to the coming halving event, which reduces mining rewards in half from 900 bitcoins to 450. Bitcoin ETF demand that has reached and eclipsed $500 million in daily average inflows definitely outstrips this new production level making for more scarcity amid strong demand from retail and institutional investors. On-chain Bitcoin activity has exceeded levels not seen since 2022.
We haven’t seen the end of new money coming to Bitcoin via the ETFs. For instance, money managers must wait before investing in new ETFs to start easing into the market. Future price predictions include many million dollar predictions espoused by the likes of the Winklevoss twins and others. Ark Invest CEO Cathie Wood sees a $1 million dollar Bitcoin price ahead.
It’s no wonder why there is so much excitement around the world’s first digital currency. The Bitcoin ETFs have been one of the most successful ETF launches of all-time; in particular, BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity Bitcoin Fund (FBTF). If the ETFs regularly buy 100% of the net new supply, Bitcoin market dynamics will have been revolutionized and make $1 million dollar Bitcoin prognostications realistic.
Where Does Bitcoin Go From Here?
When Bitcoin price nears a top, major news networks feature and hype it globally. The Bitcoin ETF launches certainly brought buzz, but the frothiness of past bull runs has not returned to this market quite yet. At the end of the 2013, 2017, 2021 bull markets FOMO took over even the retail consumer. Presently, such hype exists only on X and in the crypto space generally.
The Bitcoin ETF launches are the largest set of launches in ETF history. The eleven new Bitcoin ETFs netted a record $673 billion inflows on February 28 alone and then surpassed that total.
This created a ton of new demand for Bitcoin because when an investor purchases a Bitcoin ETF, the fund must go out and buy Bitcoin. Similarly, if an investor sells a Bitcoin ETF, the fund must sell a Bitcoin.
The Bitcoin ETFs at one point purchased an average of 3,500 to 4,300 coins each day. This is considerably more than the roughly 900 coins being created every day. Once the next Bitcoin halving takes place towards the end of April that number will only decrease to 450 bitcoins mined per day. Thus, there might not end up being enough supply to keep up with new demand.
Natural supply/demand dynamics alone are enough to drive prices higher. Whether or not the amount of sellers at this range is enough to offset new ETF money has yet to be seen. So far, the Bitcoin price has withstood constant leakage from the GBTC ETF.
Bitcoin remains a risk asset today despite potential for becoming a digital gold type asset in the future. On the 10 year chart of Bitcoin, it’s continuing to make higher lows. From where it started to every dip on its own, bear markets continue to make higher lows, and really higher highs, as well.
Bitcoin began the current run at $15,000 all the way back in 2020, making this already a monster run. During the current run, Bitcoin faced resistance at the all-time high of $69,201 before setting a new all-time high above the $70,000 handle.
Read Also: How Will the 2024 Bitcoin Halving Impact Price, Mining Rewards, and Future Trends?
