Big money keeps buying Bitcoin, even after a 21% rally. Bitcoin prices jumped 21% last week, hitting $52,000 for the first time since December 2021. This surge is likely due to growing interest in spot Bitcoin exchange-traded funds (ETFs), which attracted a record $631.3 million on February 13th. Some speculate that large traders may be running low on Bitcoin, forcing them to buy on regular exchanges and pushing prices higher. While this theory sounds plausible, it’s not entirely accurate. On-chain data shows a decrease in short-term Bitcoin holdings, suggesting that prices could climb above $55,000 if this trend continues.
Short-term sellers are cashing out, but institutions are stepping in. While short-term holders (those who bought Bitcoin in the past 6 months) have been selling quickly, it’s important to remember that they don’t always hold the price down. Some believe that “arbitrage desks” (traders who exploit price differences between markets) are always buying, but this isn’t always true. They often use other strategies to manage their exposure, and not every trade requires a buyer and seller. The key factor is who is more eager to close the deal: those selling or those buying.
Long-term holders are holding strong, but short-term selling could still impact prices. Long-term holders (those who haven’t moved their Bitcoin in over 6 months) are typically less likely to sell after a price increase. This is why analysts use on-chain data to gauge investor sentiment and market strength. Recent data shows that short-term holders significantly increased their exchange transactions, while long-term holders remained relatively inactive. This suggests that the recent sell-off is mainly driven by short-term investors, even though 79% of all Bitcoin is held by long-term holders. While this doesn’t guarantee a major price drop, it highlights the potential for rapid sell-offs in the short term.
Whales aren’t selling, institutions are buying. Some might worry that large investors (“whales”) who bought Bitcoin for the ETF launch are now selling and holding back further price gains. However, data shows the opposite. In fact, every class of holder except those with less than 100 BTC (likely individual investors) were net sellers last week. Notably, very large holders (above 100 BTC, likely institutions) actually bought a total of $1 billion worth of Bitcoin. This suggests that institutional demand for Bitcoin ETFs is growing alongside the price, providing strong support for continued gains.
New factors are driving the market. This data shows that rising Bitcoin prices are no longer solely dependent on individual investors. Traditional indicators like Google search trends or the “Fear and Greed Index” may not accurately reflect the buying power of institutions.
The outlook is bullish. Despite short-term selling, Bitcoin price has risen significantly in the past week. Unless long-term holders start selling in large numbers, the current trend suggests a limited supply of Bitcoin, potentially pushing prices above $52,000.
This information is not legal advice. Do your own research before making any decisions. Only invest what you can afford to lose and seek independent financial advice if needed. Understand the risks involved before purchasing any cryptoassets.