The market is fiercely competitive, how will the future develop after high-level consolidation?
Written by: ChandlerZ, Foresight News
After hitting a high of $99,600 on November 26, Bitcoin dropped more than 8% on the 27th, briefly falling to around $90,800. As of December 3, Bitcoin's price rebounded to around $96,000, but the fluctuations were relatively violent.
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 clear that the internal discrepancies in the market are gradually increasing as it approaches this price level. On one hand, institutional funds represented by MicroStrategy continue to increase their positions, supporting Bitcoin buying demand and pushing prices up; on the other hand, long-term holders in the market choose to sell at high prices, realizing profits. This competition between large holders and institutions has led to noticeable resistance in the market's upward pace, making it difficult to break through this important barrier.
In simple terms, the continuous buying by institutional funds and the selling behavior of long-term holders oppose each other, creating upward pressure and challenges in the market.
Who is selling
In this year-end rally, long-term investors have begun to sell off their Bitcoin reserves in large quantities, taking advantage of increased liquidity and rising demand.
Since September, the amount of Bitcoin sold by long-term investors has peaked at around 507,000 bitcoins. Although this number is large, it is still lower than the 934,000 bitcoins sold during the significant price increase in March 2024.
Notably, the current selling pace of long-term investors has already surpassed the historical peak in March 2024, with the bitcoins they are profiting from accounting for 0.27% of their total holdings daily. This pace has only exceeded this level on 177 days historically, indicating that this group of investors has become more aggressive in their selling rhythm.
In addition, the U.S. government is also simultaneously selling bitcoins seized from Silk Road by the 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 allowed to legally dispose of these confiscated bitcoins. Battle Born Investments attempted to gain ownership of these bitcoins through an appeal, but the Supreme Court's ruling rendered their request void. Due to the lower court's order for the U.S. government to 'dispose of the confiscated 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 previously stolen from Silk Road.
In October, the Supreme Court declined to hear the appeal regarding 69,370 bitcoins related to Silk Road by 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, primarily sourced from the 2020 Silk Road and Bitfinex hacking cases.
Who is buying
As long-term holders begin to allocate their Bitcoin reserves, the other side of the market is actively absorbing Bitcoin as well. Large institutional investors, especially companies like MicroStrategy and MARA, continue to show strong interest in Bitcoin, driving demand growth through capital injection, which also helps stabilize the market’s value support to a certain extent.
MicroStrategy purchased 15,400 bitcoins during the period from November 25 to December 1 at an average price of $95,976 per bitcoin, spending approximately $1.5 billion.
During the same period, MicroStrategy also sold 3,728,507 shares of company stock, raising approximately $1.5 billion in capital. As of December 1, the company stated that of its planned $21 billion equity issuance and $21 billion fixed-income securities financing, about $11.3 billion in stock 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, with a total value exceeding $38 billion.
This announcement also marks MicroStrategy's fourth consecutive week of large-scale Bitcoin purchases. On November 11, MicroStrategy founder Michael Saylor stated that MicroStrategy had increased its holdings by approximately $2.03 billion, acquiring 27,200 BTC at an average cost of $74,463; on November 18, MicroStrategy announced that the company used proceeds from stock sales to purchase 51,780 bitcoins for $4.6 billion again between November 11 and 17, with an average purchase price of $88,627; on November 25, Michael Saylor stated again that MicroStrategy had increased its holdings by approximately $97,862 per bitcoin, totaling about $5.4 billion.
Coincidentally, the publicly traded Bitcoin 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 was increased to $850 million (initially announced as $700 million).
MARA has also granted initial purchasers of the notes the option to purchase up to $150 million in total principal amount of notes within 13 days from the date of the notes' initial issuance. The net proceeds will be used to purchase more bitcoins and for general corporate purposes, which may include working capital, strategic acquisitions, expansion of existing assets, and repayment of additional debts and other outstanding liabilities.
According to the company’s third-quarter 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 the issuance of $300 million in convertible preferred notes, 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. It is the sustained buying by these institutions that has formed a significant force in the Bitcoin market, offsetting some selling pressure from retail investors and injecting signals of long-term investment into the market.
In addition to MicroStrategy and MARA, other 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 stock listed company SOS, among others, have also clearly indicated their purchase of Bitcoin as part of their corporate asset reserves. Particularly in the current macroeconomic environment, low interest rates, rising inflation, and uncertainty in returns from traditional asset classes have prompted more institutions to incorporate Bitcoin into their asset allocations to achieve diversification and preserve and increase asset value.
Additionally, the monthly inflow of funds into Bitcoin spot ETFs has surged to $6.5 billion, setting a historical record that far exceeds any previous month’s numbers.
Against this backdrop, we can consider that the evolution of the Bitcoin market is at a critical turning point. First, the $100,000 price mark may become a key node for this round of Bitcoin breakthroughs. With continuous institutional entry and steadily growing market demand, Bitcoin's price may attract broader market attention and participation as it approaches this important psychological price level, thereby pushing it into a new phase.
However, institutions often exhibit hesitation at such critical junctures, and this wait-and-see attitude may lead to a certain degree of market turbulence and adjustments after smooth market conditions, especially in the short term, where price volatility may intensify, putting pressure on the market.
In addition, it is important to clarify that there are essential differences in the cost structure and investment purposes of institutions and long-term holders in the Bitcoin market. Long-term holders often hold Bitcoin with a lower cost basis and a longer-term perspective, aiming for value growth in the future. Meanwhile, institutional investors entering the market, especially those announcing Bitcoin allocations at relatively high points, may face higher entry costs and a more complex market environment including stock prices.
Looking back at the peaks of previous bull markets, we can see that many institutions entered the market at high prices, ultimately facing the risk of price corrections. Therefore, in the current market environment, although institutional participation has brought new momentum to the Bitcoin market, investors should remain vigilant, cautiously assess market risks, and avoid blindly chasing highs.
