Bitcoin reached an all-time high of $99,600 on November 26 but then fell more than 8% on the 27th, dropping to around $90,800. By December 3, the price of Bitcoin rose back to around $96,000, but volatility remained intense.
Bitcoin is now just a step away from $100,000, which is also a significant technical threshold. Breaking this price is not only a major psychological barrier but could also be a turning point for further price increases.
However, the market appears somewhat hesitant as it approaches this critical price level. On one hand, institutional funds like MicroStrategy are still increasing their positions, driving up Bitcoin demand and consequently raising the price; on the other hand, many long-term holders choose to sell at higher prices to realize profits. This has led to a tug-of-war between large holders and institutions, increasing the difficulty of breaking through this price threshold.
In short, institutional funds continue to enter the market, but the selling pressure from long-term holders poses significant challenges, making price increases more difficult.
Who is selling?
In this wave of year-end gains, long-term investors are taking the opportunity of increased liquidity and demand to sell large amounts of Bitcoin.
Since September, long-term investors have sold 507,000 Bitcoins. Although this number is large, it has decreased compared to the 934,000 in March 2024.
It is worth noting that the selling speed of long-term investors has now exceeded the historical peak in March 2024. They are selling 0.27% of their total holdings in Bitcoin daily, a selling pace that has only exceeded this level for 177 days in history, indicating that these investors are now increasing their selling intensity.
Additionally, the U.S. government is also selling its seized Bitcoins. According to Arkham data, in the early hours of December 3, the U.S. government transferred 19,800 Bitcoins to Coinbase Prime, valued at approximately $1.92 billion.
These Bitcoins come from the 'Silk Road' case, with the U.S. District Court for the Northern District of California allowing the government to dispose of these seized Bitcoins according to the law.
Although Battle Born Investments previously attempted to reclaim these Bitcoins through appeals, the Supreme Court has declined to hear the case, meaning these Bitcoins may soon be auctioned.
According to Dune data, the U.S. government currently holds 183,422 Bitcoins, valued at approximately $17.64 billion, mainly from the Silk Road and Bitfinex hacking cases.
Who is buying?
Despite long-term holders reducing their positions, there is still a large influx of funds on the other side of Bitcoin. In particular, large institutional investors, such as MicroStrategy and MARA, remain very interested in Bitcoin, continuously increasing their holdings to drive market demand and provide support for Bitcoin.
Between November 25 and December 1, MicroStrategy spent about $1.5 billion to purchase 15,400 Bitcoins at an average price of $95,976 per Bitcoin. At the same time, MicroStrategy also raised funds by selling stocks to ensure further increases in Bitcoin holdings.
According to company data, as of December 1, MicroStrategy held a total of 402,100 Bitcoins, valued at over $38 billion.
Moreover, Bitcoin mining company MARA is also actively increasing its Bitcoin reserves. On December 2, MARA announced it would issue convertible preferred notes maturing in 2031 and raised its planned financing amount from $700 million to $850 million. The net proceeds will be used to purchase more Bitcoin.
The continued buying by these institutions forms a strong support for the Bitcoin market, offsetting some of the selling pressure from retail investors, and sends a long-term investment signal to the market.
Not only MicroStrategy and MARA, but other companies such as SAIHEAT, Genius Group, and Anixa Biosciences are also starting to purchase Bitcoin as part of their asset reserves. In the current environment of low interest rates and rising inflation, more and more institutions view Bitcoin as a means of asset preservation and appreciation.
In addition, the inflow of funds into Bitcoin spot ETFs has also reached a historic high, with a single-month inflow of $6.5 billion, far exceeding any previous month’s record.
Summary
It can be said that the Bitcoin market is at a critical turning point. The $100,000 price level could become the key node for this round of Bitcoin breakthroughs. With the continued influx of institutional capital and the steady growth of market demand, the price may attract more widespread market attention as it approaches this important psychological threshold, pushing Bitcoin into a new phase.
However, institutions often exhibit a wait-and-see attitude at such critical junctures, which may lead to a certain degree of fluctuation and adjustment in the market after a period of smooth upward movement, especially in the short term, where price volatility may increase, putting pressure on the market.
It is important to note that institutions and long-term holders have different investment goals and cost structures. Long-term holders typically hold Bitcoin at a lower cost with the aim of long-term value growth, while institutional investors may face higher entry costs and, due to their large capital scale, may have a significant impact on market volatility.
Looking back at history, we see many institutions entering at price peaks, ultimately facing the risk of a pullback. Therefore, although institutional participation injects new vitality into the market, investors still need to remain vigilant, carefully assess market risks, and avoid blindly chasing highs.
