On 7 June 2024, Charles Edwards, founder of Capriole Investments, shared an insightful thread on the social media platform X (formerly known as Twitter), discussing the current state and future prospects of Bitcoin’s price.

Edwards is a prominent figure in the cryptocurrency space, known for his technical analysis and investment strategies. He is the founder of Capriole Investments, a digital asset hedge fund focused on outperforming Bitcoin through quantitative strategies and stringent risk management. Edwards’ expertise covers a broad range of topics within the crypto industry, including valuation metrics, technical analysis, and macroeconomic conditions.

Edwards began by questioning why Bitcoin hadn’t yet reached $100,000, despite significant institutional activity. He noted that since the launch of US-listed spot Bitcoin ETFs on January 11, these ETFs have acquired 200% of the Bitcoin mined during this period. With Bitcoin’s price up 50% to $71,000 since the ETFs’ inception, he acknowledged the notable growth but highlighted that many expected more substantial gains.

Next, Edwards discussed the influence of long-term holders on Bitcoin’s price. He explained that the share of Bitcoin held by long-term holders (those who have held their assets for more than two years) has decreased from 57% in December 2023 to 54% as of June 2024. While a 3% decrease might seem minor, Edwards pointed out that this equates to approximately 630,000 Bitcoins being sold. This selling pressure from seasoned holders counteracts the buying pressure from new institutional investments, contributing to the slower-than-expected price increase.

Edwards also highlighted that the effects of the recent Bitcoin Halving, which occurred in April, have not yet been fully realized. The Halving event reduced Bitcoin’s daily issuance by 50%, meaning fewer new Bitcoins are being introduced into circulation. He predicted that over the next year, the difference between spot ETF demand and Bitcoin supply will grow significantly, as institutional processes for investment often require several quarters to complete. This delayed response could lead to more pronounced price movements in the future as the supply squeeze tightens.

In the final part of his thread, Edwards outlined three key factors that could drive strong price appreciation for Bitcoin: increased daily buying by ETFs, reduced selling by long-term holders, and growth in US liquidity. He emphasized that for substantial price growth, at least one of these conditions would need to be met. Edwards expressed optimism that these factors would align over the coming months, suggesting that Bitcoin’s price could see more significant upward momentum as these dynamics play out.

At the time of writing, Bitcoin is trading at around $71,027, up 69.13% since the start of the year.

Source: TradingView

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