Don’t Lose Patience With Bitcoin 

Bitcoin Remains In A Range

If you combine the inflows into the spot ETFs with the rapid increase in Bitcoin treasury companies, you could be forgiven for questioning why the BTC price remains in a tight range.

The spot ETFs have experienced net inflows of $2.2 billion so far this month, and Metaplanet and Strategy alone have purchased 13,799 Bitcoin worth $1.4 billion in June.

However, June was the weakest BTC monthly price performance in the last 12 months, while the S&P 500 and NASDAQ are at all-time highs.

HODL Waves

Examining the HODL waves for June suggests that retail investors have been reducing their Bitcoin positions and exposure.

The 28-day average change in the BTC being held by investors who have been holding BTC for 1 to 5 years shows that around 7,400 bitcoins a day are being sold into the market by these long-term holders.

During the recent rally in BTC after Liberation Day, that same group of investors were purchasing around 11,000 bitcoins a day.

Are spot Bitcoin holders selling to buy ETFs and treasury company stocks? Possibly.

Open Interest

Additionally, the Bitcoin Open Interest suggests that a growing cohort of retail investors is trading derivatives rather than buying spot Bitcoin and typically using leverage to try to increase their gains.

Open interest currently stands at around $25 billion, which has a limited positive impact on the BTC price.

New or short-term holders (those holding for less than one month) typically accumulate bitcoin at market highs. Not surprisingly, activity within this group in June is low, and on balance, they are net sellers.

Overall, new capital inflows from retail into the spot BTC market have been muted.

Over the last three months, approximately 240,000 bitcoins have been sold into the market, effectively offsetting the positive inflows from spot ETFs and treasury companies.

The equilibrium between supply and demand in the network is driving the current period of consolidation.

On a more positive note, the profit-taking activity within long-term holders is slowing to around 1,000 bitcoins a day.

The global M2 money supply, which has proven to be a reliable forward indicator for BTC price, remains on an upward trajectory.

So don’t lose patience with Bitcoin just yet.

As noted in a previous post, if Bitcoin can regain $108k and push through $112k, then short positions will have to cover that move, and the resultant short squeeze could form the basis of the next leg up.