Bitcoin’s (BTC) momentum continues to weaken, holding below $106,000. Selling pressure is coming from long-term Bitcoin holders. Furthermore, the growing strength of the US dollar is reducing risk appetite. Market data from this week shows this clear trend.
Investor anxiety has grown noticeably. Long-term Bitcoin holders, some active since 2018, have begun selling. One prominent case involves 1,800 BTC, valued at $200 million, moved to Kraken. It is believed to belong to a Mt. Gox era trader. This massive sell-off overshadowed the $524 million in net inflows to BTC ETFs. Funds appear to be rotating into privacy cryptocurrencies. Zcash (ZEC) surged 99% and Decred (DCR) 74% in 30 days.
Is long-term confidence in Bitcoin truly at stake?
On the other hand, the Dollar Index (DXY) shows a historical inverse correlation with Bitcoin. Recently, the DXY has strengthened against other major currencies. This reflects confidence in US fiscal management. When investors fear stagflation, the local currency usually weakens. However, the current scenario favors the dollar. This strength reduces the appeal of risk assets like BTC, even as the S&P 500 nears highs.
The market pullback also affects corporate reserve strategies. Companies like Strategy and Metaplanet lose the incentive to issue shares to buy more BTC. Previously, their shares traded at a premium to their assets (mNAV). That advantage has disappeared. Issuing new shares now would dilute current shareholders. Moreover, raising funds through debt is less beneficial and limits growth.
This combination of factors keeps BTC under pressure. Sales by long-term Bitcoin holders are a concerning signal. The strong dollar and interest in privacy tokens worsen the situation. These elements are restraining the asset’s recovery. Therefore, the odds of BTC reaching $112,000 in the near term appear low.
