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Institutional Demand at 500% of Bitcoin Supply Could Drive BTC to $96K: Analyst
TL;DR
Institutions are purchasing Bitcoin at a rate 500% higher than its daily mining output, which could push its price to $96,000, according to analyst Charles Edwards. Historical data shows that similar demand-to-supply ratios have led to significant price increases.
Key points
- Institutions buying Bitcoin at 500% of mining rate
- Daily mining output is approximately 450 BTC
- Historical demand-to-supply ratios lead to price gains
- Average return of 24% over the following month
- Potential price target of $96,000 for Bitcoin
Mentioned in this story
Capriole Investments
Institutions are buying Bitcoin (BTC) at more than five times the rate miners are producing it, and according to Capriole Investments founder Charles Edwards, that gap has historically come right before huge price gains.
In a post on May 4, Edwards said every instance in the past of this demand-to-supply ratio produced an average return of 24% over the following month, which, from current levels, would take BTC to around $96,000.
What the Data Shows
The 500% figure comes from tracking daily institutional purchases, primarily by public companies and ETFs, against the roughly 450 BTC mined each day since the 2024 halving.
“Every time it’s been this high before, price has shot up over the next week,” stated Edwards. “The average return in prior cases is +24% over 1 month from here, that would take it to around $96K.”
Earlier today, Bitcoin pushed past $80,000 for the first time since January. It had been trading at levels from $78,000 to $80,500 within the last 24 hours, per CoinGecko, and had risen by 20% over the last 30 days.
The rise sparked a wave of forced liquidations, which resulted in the loss of more than $162 million worth of short positions over the course of 24 hours, based on data from CoinGlass.
Trading volume also jumped 95% in 24 hours to around $34 billion.
Other analysts have added weight to the bull case, though with varying degrees of conviction. For instance, trader Taiki Maeda wrote that he expects Strategy to buy $2 to $3 billion worth of Bitcoin over the next two weeks via its STRC instrument, with the acquisitions likely to “accelerate into May 14th.”
On his part, chartist Ali Martinez pointed to a multi-decade ascending trendline that BTC has bounced from in 2017, 2018, 2020, and 2022, arguing that the recent dip to $65,000 suggests “the bottom could be in.”
The Other Side of the Coin
BTC’s crossing above $80,000 is on the heels of a 12% rise last month, but according to CryptoQuant, the increase was almost exclusively by perpetual futures interest, not spot trading.
Q&A
What is the current institutional demand for Bitcoin compared to its supply?
Institutions are buying Bitcoin at a rate that is 500% of the daily mining output, which is approximately 450 BTC.
How much could Bitcoin's price increase based on historical data?
Historically, similar demand-to-supply ratios have resulted in an average price increase of 24% over the following month, potentially raising Bitcoin's price to around $96,000.
Who is Charles Edwards and what is his prediction for Bitcoin?
Charles Edwards is the founder of Capriole Investments, and he predicts that Bitcoin could reach $96,000 based on current institutional buying trends.
