The market competition is intense; how will the future play out 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, briefly dropping to around $90,800. As of December 3, the price of bitcoin rebounded to around $96,000, but fluctuations were 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 the internal divergences of 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 the buying demand for bitcoin and driving prices up; on the other hand, long-term holders in the market choose to sell at high prices, locking in profits. This battle between large holders and institutions has significantly hindered 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 opposition, 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 demand.
Since September, the bitcoin sold by long-term investors has reached a peak of about 507,000 bitcoins. Although this number is large, it still represents a decrease compared to 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 of March 2024. Currently, the bitcoins they profit from daily account for 0.27% of their total holdings, a pace historically exceeded only 177 days, indicating that this segment of investors has become more aggressive in their selling rhythm.
Additionally, the U.S. government is concurrently selling the 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, worth approximately $1.92 billion.
Previously, the Northern District Court of California ruled that the U.S. government is allowed to dispose of the seized bitcoins legally. Battle Born Investments attempted to gain ownership of these bitcoins through an appeal, but the Supreme Court's ruling rendered its request void. Due to the lower court's order for the U.S. government to 'dispose of the seized defendant's property according to law,' U.S. marshals or other agencies may soon receive court instructions to sell this batch of bitcoins that were once stolen from Silk Road.
In October, the Supreme Court declined to hear the appeal involving 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, worth approximately $17.64 billion, primarily from the 2020 Silk Road and Bitfinex hacking cases.
Who is buying
As long-term holders begin to allocate their bitcoin reserves, the other end of the market is actively absorbing bitcoins. Large institutional investors, especially companies like MicroStrategy and MARA, continue to express strong interest in bitcoin, driving demand growth through capital injection and stabilizing market value support to some extent.
MicroStrategy spent approximately $1.5 billion to increase its holdings by 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 company stock, raising approximately $1.5 billion. As of December 1, the company stated that there are still about $11.3 billion in stock available for its planned $21 billion equity issuance and $21 billion fixed-income securities financing. 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 holds a total of 402,100 bitcoins, with a total value exceeding $38 billion.
This announcement also marks the fourth consecutive week that MicroStrategy has disclosed large-scale bitcoin purchases. On November 11, MicroStrategy founder Michael Saylor stated that MicroStrategy purchased 27,200 BTC for approximately $2.03 billion, with an average cost of $74,463; on November 18, MicroStrategy announced that the company would use the proceeds from stock sales to purchase 51,780 bitcoins again for $4.6 billion between November 11 and 17, with an average purchase price of $88,627; on November 25, Michael Saylor again stated that MicroStrategy had purchased 55,500 bitcoins in the past week at an average price of approximately $97,862, with a total value of about $5.4 billion.
Coincidentally, the publicly listed bitcoin mining company MARA 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 due in 2031 would be increased to $850 million (initially announced as $700 million).
MARA also granted the initial purchasers of the notes an option to purchase up to $150 million in total principal amount of the notes within 13 days from the date of the notes' initial issuance. The net proceeds will be used to buy more bitcoins and for general corporate purposes, which may include working capital, strategic acquisitions, existing asset expansion, and repaying additional debts and other outstanding liabilities.
According to the company's Q3 financial report, as of October 31, MARA's balance sheet held 26,747 BTC, producing a total of 2,070 BTC in the third quarter, purchasing 6,210 BTC, of which 4,144 were bought using the 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 forms a significant force in the bitcoin market, offsetting some of the selling pressure from retail investors and injecting signals of long-term investment into the market.
Apart from 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 stock listed companies like SOS, among others, have all clearly indicated their intentions to purchase bitcoin as part of their corporate asset reserves to some extent. Especially in the current macroeconomic environment of low interest rates, rising inflation, and uncertainty in the returns of traditional asset classes, more institutions are incorporating bitcoin into their asset allocations to achieve diversification and asset preservation.
In addition, the monthly inflow of funds into bitcoin spot ETFs has surged to $6.5 billion, setting a new historical high, far surpassing records from any previous month.
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 breaking through barriers. With the continued entry of institutions and the steady growth of market demand, as bitcoin approaches this important psychological price level, it may attract broader market attention and participation, 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 turbulence and adjustment in the market after smooth trends, especially in the short term, where price volatility may intensify, putting pressure on the market.
Additionally, it is important to clarify that the cost structures and investment purposes of institutions and long-term holders in the bitcoin market are fundamentally different. Long-term holders typically hold bitcoin with a lower cost basis and longer-term perspective, aiming for value growth in the future. On the other hand, institutional investors' entry, especially those who announced their bitcoin positions at relatively high points, may face higher entry costs and a more complex market environment, including stock prices.
Looking back at previous market peaks, we can see that many institutions joined the market at price highs, ultimately facing the risk of price pullbacks. Therefore, in the current market environment, although institutional participation brings new momentum to the bitcoin market, investors should remain vigilant and carefully assess market risks to avoid blindly chasing highs.
