Bitcoin Price Stagnant Despite Institutional Buying Surge

Bitcoin's price has been stagnant, hovering just above $100,000 and below $112,000, despite a surge in institutional interest. This phenomenon has puzzled many retail investors and analysts, who expected the cryptocurrency to soar given the increased demand from institutional buyers. However, according to Charles Edwards, founder of Capriole Investments, the reason for this price stagnation lies in the behavior of long-term Bitcoin holders, often referred to as "OGs."

Edwards explains that these long-term holders have been selling their positions to institutional investors since the launch of Bitcoin ETFs in January 2024. This "quiet transfer of wealth" has resulted in a consolidation phase for Bitcoin, with the price trading in a range between $102,000 and $110,000. Despite the sell-off from these long-term holders, the situation is not necessarily bearish. New buyers, primarily corporate treasuries and institutional players, are absorbing the supply, indicating a shift towards Bitcoin as a reserve asset.

The influx of institutional buyers has led to a surge in the group of holders who have kept their Bitcoin for six months or longer. This cohort has absorbed nearly all the BTC unloaded by long-term holders over the last 18 months, signaling a growing trend of companies adding Bitcoin to their balance sheets for long-term strategy rather than short-term speculation. Notable investors include Cardone Capital, ProCap, Panther Metals, and Green Minerals, among others. This diversity of companies entering the Bitcoin market underscores its increasing attractiveness as a reserve asset.

Despite billions of dollars flowing into Bitcoin spot ETFs, the price has not seen a significant surge. This is because institutions tend to accumulate BTC via over-the-counter (OTC) desks rather than placing large market orders on public exchanges. These OTC purchases do not immediately affect price action as they avoid triggering demand pressure on order books. According to on-chain analyst TXMC, Bitcoin's price is mostly determined by activity on centralized exchanges, where only a small fraction of the supply is actively traded at any given time. Therefore, while ETF managers might be acquiring large amounts of BTC, their activity is not driving the price gains that retail investors anticipate.

Despite the current stagnation, Edwards remains optimistic. He believes that the rising number of corporate Bitcoin holders is creating a flywheel effect, where more companies adding BTC to their treasuries will pressure others to follow. This could lead to steady and long-term demand that eventually overwhelms selling pressure. Edwards predicts that if the 6-month-plus holders continue their relentless buying, Bitcoin is set up for a breakout. He suggests that the flywheel still has a long way to go, but when it gains full speed, the next phase of Bitcoin's bull run could be unprecedented.