The market competition is intense; how will the future unfold after high-level consolidation?
Written by: ChandlerZ, Foresight News
After reaching a high of $99,600 on November 26, Bitcoin fell more than 8% on the 27th, dropping to around $90,800 at one point. As of December 3, the price of Bitcoin has rebounded to around $96,000, but the fluctuations have been relatively intense.
Bitcoin is just a step away from the $100,000 mark, indicating that the market is facing a critical technical breakthrough point. This historic price level is not only an important psychological barrier but may also become a turning point for further price increases.
However, it is evident that as we approach this price level, the internal divergences within the market are gradually widening. On one hand, institutional funds represented by MicroStrategy are continuously increasing their positions, supporting Bitcoin's buying demand and pushing prices up; on the other hand, long-term holders in the market choose to sell at high prices to realize profits. This game between large holders and institutions has led to significant resistance to the market's upward momentum, making it difficult for prices to break through this important threshold.
In simple terms, the continuous buying by institutional funds and the selling behavior of long-term holders are in direct opposition to each other, creating upward pressure and challenges in the market.
Who is selling?
In this year-end surge, long-term investors have started to sell off their Bitcoin reserves in large quantities, taking advantage of the increased liquidity and growing demand.
Since September, the number of Bitcoins sold by long-term investors has peaked at about 507,000 Bitcoins. Although this number is large, it is still down compared to the 934,000 Bitcoins sold during the significant price increases in March 2024.
It is noteworthy that the current selling speed of long-term investors has already surpassed the historical high point in March 2024, with the Bitcoin they profit from daily accounting for 0.27% of their total holdings. This speed has only been exceeded in history for 177 days, indicating that this group of investors has become more aggressive in their selling pace.
Additionally, the U.S. government is also simultaneously selling the seized Bitcoins from the Silk Road DOJ. According to Arkham data, in the early hours of December 3, an address marked as belonging to the U.S. government transferred 19,800 BTC to Coinbase Prime, valued at approximately $1.92 billion.
Previously, the U.S. District Court for the Northern District of California ruled that the U.S. government is legally allowed to dispose of these seized Bitcoins. Battle Born Investments attempted to gain ownership of these Bitcoins through an appeal, but the Supreme Court's ruling rejected its request. Due to the lower court's order for the U.S. government to 'dispose of the seized defendant's property according to the law,' U.S. marshals or other agencies may soon receive court instructions to sell this batch of Bitcoins that were stolen from the Silk Road.
In October, the U.S. Supreme Court refused to hear the appeal regarding 69,370 Bitcoins related to the Silk Road from Battle Born Investments and others. This means that these Bitcoins may soon be auctioned off.
Dune data shows that the U.S. government still holds 183,422 Bitcoins, valued at approximately $17.64 billion, mainly sourced from the 2020 Silk Road and Bitfinex hacking case.
Who is buying?
While long-term holders begin to distribute their Bitcoin reserves, the other end of the market is also actively absorbing Bitcoin. Large institutional investors, especially companies like MicroStrategy and MARA, continue to maintain a strong interest in Bitcoin, driving demand for Bitcoin through capital injection, which also stabilizes the market's value support to some extent.
MicroStrategy spent about $1.5 billion to increase its holdings by 15,400 Bitcoins at an average price of $95,976 per Bitcoin between November 25 and December 1.
During the same period, MicroStrategy also sold 3,728,507 shares of company stock, raising approximately $1.5 billion in funds. As of December 1, the company stated that approximately $11.3 billion of the planned $21 billion equity issuance and $21 billion fixed-income securities financing remains available for sale. This financing plan is expected to raise a total of $42 billion over the next three years, primarily for further Bitcoin purchases.
According to Saylortracker data, as of December 1, MicroStrategy held a total of 402,100 Bitcoins, worth over $38 billion.
This announcement marks the fourth consecutive week that MicroStrategy has reported large-scale Bitcoin purchases. On November 11, MicroStrategy founder Michael Saylor stated that the company had increased its holdings by 27,200 BTC for about $2.03 billion, with an average cost of $74,463; on November 18, MicroStrategy announced that it would use proceeds from stock sales to purchase 51,780 Bitcoins for $4.6 billion between November 11 and 17, at an average purchase price of $88,627; on November 25, Michael Saylor stated again that MicroStrategy had increased its holdings by 55,500 Bitcoins at an average price of about $97,862, totaling approximately $5.4 billion.
Coincidentally, the Bitcoin-listed mining company MARA has also joined the ranks of Bitcoin strategic reserves. On December 2, MARA announced that the total principal amount of its 0.00% convertible preferred notes maturing in 2031 has been adjusted to $850 million (initially announced as $700 million).
MARA also granted initial purchasers of the notes the option to purchase up to $150 million in total principal amount of the notes within 13 days from the initial issuance date. The net proceeds will be used to purchase more Bitcoins and for general corporate purposes, which may include working capital, strategic acquisitions, existing asset expansions, and repaying additional debts and other outstanding obligations.
According to the company's Q3 financial report, as of October 31, MARA held 26,747 BTC on its balance sheet, produced a total of 2,070 BTC in the third quarter, and purchased 6,210 BTC, of which 4,144 were bought using proceeds from a $300 million convertible preferred note issuance, at an average price of $59,500.
MicroStrategy has continuously increased its Bitcoin holdings through debt financing over the past few years, while MARA, as a major Bitcoin mining company, is also expanding its Bitcoin assets through ongoing mining activities and strategic purchases. The continuous buying by these institutions has formed an important force in the Bitcoin market, offsetting some of the selling pressure from retail investors and injecting signals of long-term investment into the market.
In addition to MicroStrategy and MARA, U.S. listed companies such as SAIHEAT, Genius Group, Anixa Biosciences, AI company Genius Group, Israeli clinical-stage immunotherapy company Enlivex Therapeutics, and Chinese concept stocks like SOS, among others, have explicitly indicated purchases of Bitcoin as part of their corporate asset reserves to varying degrees. Especially in the current macroeconomic environment, with low interest rates, rising inflation, and uncertainty in returns from traditional asset classes, more institutions are incorporating Bitcoin into their asset allocations in hopes of achieving diversification and preserving and increasing asset value.
In addition, the inflow of funds into Bitcoin spot ETFs has surged to $6.5 billion in a single month, setting a new historical record, far exceeding any previous month's record.
Against this backdrop, we can consider that the evolution of the Bitcoin market is at a critical turning point. First, the $100,000 price level may become a key node for this round of Bitcoin's breakthrough. As institutions continue to enter and market demand steadily grows, Bitcoin's price may attract wider market attention and participation as it approaches this important psychological price point, thereby pushing it into a new phase.
However, institutions often exhibit indecisive emotions before such important junctures, and this wait-and-see attitude may lead to a certain degree of market turbulence and adjustment after a smooth trend, especially in the short term, where price volatility may intensify, putting pressure on the market.
Moreover, it is important to clarify that there are fundamental differences in the cost structure and investment objectives of institutions and long-term holders in the Bitcoin market. Long-term holders typically hold Bitcoin with a lower cost basis and a longer-term perspective, aiming to achieve value growth in the future. In contrast, institutional investors entering the market, especially those announcing Bitcoin investments at relatively high points, may face higher entry costs and a more complex market environment, including stock price considerations.
Looking back at the peaks of past bull markets, we can see that many institutions entered the market at high price points, ultimately facing the risk of price correction. Therefore, in the current market environment, although institutional participation has brought new momentum to the Bitcoin market, investors should remain vigilant, prudently assess market risks, and avoid blindly chasing highs.
