The two things 99% of people don’t understand.
It’s been over a year since the 2024 Block Reward Halving, but Bitcoin is yet to make an explosive move that many analysts have been discussing: reaching $250,000 (possibly higher) in less than six months.
We’ve been (mostly) hovering between $90,000 and $110,000 since the beginning of this year, and around $105,000 over the past two months.
For context, Bitcoin’s market cap would increase from $2.15 trillion at present to a whopping $4.93 trillion if it manages to reach $250,000.
Once this happens, it will become the second-largest asset by market cap globally.
We often hear about Bitcoin’s hard cap of 21 million, dwindling inflation rate, and rapid accumulation from institutional investors, which are important considerations.
However, there’s another factor at play, one that is having a more noticeable impact on short-term price movements.
Over-the-counter (OTC) trading between institutional investors.
Bitcoin trades are made with not a single satoshi hitting the open market.
It’s peer-to-peer (P2P), especially for the big end of town.
Many are making up for lost time by going through the specialised departments of centralised exchanges (CEXs), which cater to venture capitalists, high-net-worth individuals, and businesses with millions to invest in Bitcoin and blue-chip altcoins.
The largest public Bitcoin treasury companies and US spot Bitcoin ETF managers have been growing their bags.
Total Bitcoin holdings managed by institutions now stand at over 6.1 million BTC, representing a 924% increase over the past decade.
This sum translates to over 30% of Bitcoin’s circulating supply. Imagine how this will be in just four years, likely the majority of BTC holdings.
Retail continues to ignore Bitcoin’s growth. BTC is near its all-time high, but Google Trends shows significantly less interest in search terms involving Bitcoin, crypto, and Ethereum than during the peaks of the 2017 and 2021 crypto bull runs.
Between 2012 and 2023, we had LocalBitcoins, the once-popular P2P option, as well as OTC for larger investors.
Nowadays, we have BinanceP2P and Paxful, among other options, for those who want to bypass conventional exchanges.
Even then, OTC desks of most regulated exchanges can help wealthy investors execute their large trades without being recorded on a public ledger.
Then there’s also the matter of “virgin Bitcoin”, newly minted BTC.
These are highly sought-after coins, as there is no transaction trail, making them perfect for avoiding the prying eyes of blockchain sleuths.
Unfortunately, these will become increasingly harder to source as Bitcoin’s daily supply of new BTC continues to halve every 210,000 blocks (roughly every four years).
Knowing these two things already puts you ahead of 99% of people globally.
Who cares? Those who are here for the long haul certainly do.
Why? Because you will be less likely to second-guess yourself and panic sell after lengthy periods of Bitcoin trending sideways.
Even modest gains, around 50% since the 2021 ATH of $69,400, are “too boring” for many Bitcoin holders who look to make big bucks quickly.
This is partially why newbies still obsess over memecoins or become fixated on certain altcoin narratives (AI tokens, RWAs, NFTs, DePIN, etc).
Before anyone accuses me of hypocrisy, I must clarify that I have covered these sectors/themes over the past 18 months, but I don’t focus on them; there is a difference.
Despite 94.7% of BTC having already been mined, virgin BTC remains popular among Bitcoin miners and large traders, especially for those operating from or associated with sanctioned countries such as Russia and North Korea.
Before Bitcoin haters assume I’m backing up their argument that the asset is used for illicit activity, rest assured that much of this occurred through informal banking systems, shell companies, commodity swaps, and using another nation as a go-between, all well before Bitcoin emerged in 2009…
Additional thoughts
A relative lack of volatility and price increases doesn’t mean there’s less interest in the commodity.
Remember, institutional investors don’t want us here, as is the case for other markets.
At best, they’re happy for us to gain exposure to Bitcoin, provided that we only use them as a custodian.
Considering the intensifying supply crunch and insatiable demand for BTC, one can never have enough of it. Just ask Michael Saylor.
While there were VCs such as Tim Draper, Mike Novogratz and the Winklevoss Twins, the market was predominantly driven by everyday investors until 2017.
Many people were hoodwinked by much of the discussion surrounding Bitcoin and altcoins in their early days, with various anti-crypto commentators continuously peddling the argument that these digital assets are “primarily used by money launderers and other criminals.”
https://medium.com/@cryptowithlorenzo/why-we-shouldnt-be-investing-in-crypto-6ea5bc7de737
The next time someone complains about BTC’s price barely moving, ask yourself these questions:
– Is there something wrong with its fundamentals?
– What are governments and corporations doing? Are they still accumulating BTC or rapidly offloading vast amounts?
– Are policymakers banning or heavily restricting cryptocurrencies, or are they making laws conducive to this asset class?
If there’s nothing wrong here, then keep calm and HODL on.
Before wrapping up, a quick word about (blue-chip) altcoins, notably XRP, SOL, LTC and ADA. These will likely start pumping again once we see multiple ETF approvals by the end of this year. Check out commentary from Bloomberg analysts James Seyffart and Eric Balchunas for updates.
P.S. A quick shout-out to CoinDesk or a similar crypto news outlet that published a story within the past few weeks covering similar content to what I’ve included.
It was about why Bitcoin’s price hasn’t moved due to OTC trading and institutions looking to suppress the price of Bitcoin so they can accumulate more while it’s still relatively cheaper.
I can’t find that article, so feel free to share this in the comments section.
Thanks for reading.
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You might also be interested in these stories:
https://cryptowithlorenzo.medium.com/these-crypto-scams-are-becoming-more-sophisticated-40f35dc6e657
https://medium.com/@cryptowithlorenzo/its-not-too-late-to-own-at-least-half-a-bitcoin-eba7ac43a21c
https://cryptowithlorenzo.medium.com/bitcoin-is-going-to-zero-5562122f5481
Disclaimers
- This blog post is for informational purposes only. It is not financial, legal, or investment advice. You are ultimately responsible for your decisions.
- My opinions in this piece may not reflect those of any news outlet, person, organisation, or entity listed here.
- Please do sufficient research before investing in any cryptocurrency assets, staking, NFTs, or other products associated with this space.