Written by ChandlerZ, Foresight News
After hitting a high of $99,600 on November 26, Bitcoin fell more than 8% on the 27th, once falling to around $90,800. As of December 3, the price of Bitcoin rebounded to around $96,000, but the ups and downs were relatively drastic.
Bitcoin is just one step away from the $100,000 mark, which means the market is facing a critical technical breakthrough point. This historic price is not only an important psychological level, but also a turning point for further price increases.
But it is clear that the market is becoming increasingly divided as it approaches this price. On the one hand, institutional funds represented by MicroStrategy continue to increase their positions, supporting the demand for Bitcoin and driving up prices; on the other hand, long-term holders in the market choose to sell when prices are high to realize profits. This game between large investors and institutions has led to significant resistance to the market's upward pace, making it difficult for prices to break through this important barrier.
Simply put, the continued buying of institutional funds and the selling behavior of long-term holders are in conflict with each other, creating upward pressure and challenges for the market.
Who is throwing
During this year-end rally, long-term investors have taken advantage of increased liquidity and demand to begin selling their Bitcoin reserves in large quantities.
Since September, long-term investors have sold a peak of about 507,000 Bitcoins, which is a large number, but still down from the 934,000 Bitcoins sold in March 2024 when prices surged.
It is worth noting that the current selling speed of long-term investors has exceeded the historical high in March 2024. The current daily profit of Bitcoin they make accounts for 0.27% of their total holdings. This speed has only been exceeded for 177 days in history, indicating that the selling pace of this part of investors has become more aggressive.
In addition, the US government is also simultaneously selling off the bitcoins confiscated by the Silk Road DOJ. According to Arkham data, in the early morning of December 3, an address marked as the US government transferred 19,800 BTC to Coinbase Prime, worth approximately US$1.92 billion.
Previously, the U.S. District Court for the Northern District of California ruled that the U.S. government was allowed to dispose of the confiscated bitcoins according to law. Battle Born Investments had tried to obtain ownership of these bitcoins through appeal, but the Supreme Court's ruling frustrated its request. Since the lower court ordered the U.S. government to "dispose of the confiscated defendant's property according to law", the U.S. Marshals or other agencies may soon receive instructions from the court to sell the bitcoins that were once stolen from Silk Road.
In October, the U.S. Supreme Court refused to hear an appeal by Battle Born Investments and others for 69,370 bitcoins related to the Silk Road, meaning that these bitcoins may soon be auctioned.
Dune data shows that the US government still holds 183,422 bitcoins, worth approximately US$17.64 billion, mainly from the 2020 Silk Road and Bitfinex hacking cases.
Who is buying?
While long-term holders are beginning to allocate their Bitcoin reserves, the other side 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 the growth of Bitcoin demand through capital injection, and to a certain extent, consolidating the value support of the market.
MicroStrategy spent about $1.5 billion to increase its holdings of 15,400 bitcoins between November 25 and December 1, at an average price of $95,976 per bitcoin.
During the same period, MicroStrategy also sold 3,728,507 shares of the company's stock, raising about $1.5 billion in funds. As of December 1, the company said it still had about $11.3 billion of shares to sell out of its planned $21 billion equity offering and $21 billion in fixed income securities financing. This financing plan is expected to raise a total of $42 billion over the next three years, mainly for further purchases of Bitcoin.
According to Saylortracker data, as of December 1, MicroStrategy held a total of 402,100 bitcoins with a total value of more than $38 billion.
This announcement is also the fourth consecutive week that MicroStrategy has announced large-scale Bitcoin purchases. On November 11, MicroStrategy founder Michael Saylor wrote that MicroStrategy increased its holdings of 27,200 BTC at an average cost of $74,463 for approximately $2.03 billion; on November 18, MicroStrategy announced that the company used the proceeds from the sale of shares to purchase another 51,780 Bitcoins at $4.6 billion between November 11 and 17, 2024, with an average purchase price of $88,627; on November 25, Michael Saylor wrote again that MicroStrategy has increased its holdings of 55,500 Bitcoins at an average price of approximately $97,862 in the past week, with a total value of approximately $5.4 billion.
Coincidentally, MARA, a listed Bitcoin mining company, has also joined the ranks of Bitcoin strategic reserves. On December 2, MARA announced that the total principal amount of its 0.00% convertible senior notes due in 2031 was increased to US$850 million (initially announced as US$700 million).
MARA also granted the initial purchasers of the Notes an option to purchase up to $150 million in aggregate principal amount of the Notes within 13 days from the date of the initial issuance of the Notes. The net proceeds will be used to purchase additional Bitcoin and for general corporate purposes, which may include working capital, strategic acquisitions, expansion of existing assets, and repayment of additional and other outstanding debt.
According to the company’s third-quarter financial report, as of October 31, MARA held 26,747 BTC on its balance sheet. In the third quarter, 2,070 BTC were produced and 6,210 BTC were purchased, of which 4,144 were purchased using proceeds from the issuance of $300 million convertible senior notes at an average price of $59,500.
MicroStrategy has been increasing its Bitcoin holdings through debt financing over the past few years, and MARA, as a major Bitcoin mining company, is also further expanding its Bitcoin assets through continued mining activities and strategic purchases. It is the continued buying of these institutions that has formed an important force in the Bitcoin market, offsetting the selling pressure of some retail investors and injecting signals of long-term investment into the market.
In addition to MicroStrategy and MARA, US listed companies SAIHEAT, Genius Group, Anixa Biosciences, AI company Genius Group, Israeli clinical stage immunotherapy company Enlivex Therapeutics, and Chinese concept listed company SOS, etc., have all clearly purchased Bitcoin as a company asset reserve to a certain extent. Especially in the current macroeconomic environment, low interest rates, rising inflation, and uncertainty in returns from traditional asset classes have prompted more institutions to add Bitcoin to their asset allocation in order to achieve diversification and asset preservation and appreciation.
In addition, monthly inflows into Bitcoin spot ETFs have soared to $6.5 billion, a record high and far exceeding any previous monthly record.
In the above context, we can believe that the evolution of the Bitcoin market is at a critical turning point. First, the $100,000 price mark may become the key node for this round of Bitcoin to break through the circle. With the continuous entry of institutions and the steady growth of market demand, the price of Bitcoin may usher in wider market attention and participation when it approaches this important psychological price, thereby pushing it into a new stage.
However, institutions often feel hesitant at such important junctures. This wait-and-see attitude may lead to a certain degree of market shock and adjustment after a smooth market situation. Especially in the short term, price volatility may increase, bringing certain pressure to the market.
In addition, it should be made clear 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 tend to hold Bitcoin with a lower cost basis and a longer-term perspective, with the goal of achieving value growth in the future. The entry of institutional investors, especially those who announced the layout of Bitcoin at a relatively high point, may face higher entry costs and a more complex market environment including stock prices.
Looking back at the peak of the bull market in previous years, we can see that many institutions joined the market at high prices and may eventually face the risk of price correction. Therefore, in the current market environment, although the participation of institutions has brought new impetus to the Bitcoin market, investors should remain vigilant, carefully assess market risks, and avoid blindly chasing high prices.
