Impact of Strategy’s Bitcoin Purchases on BTC Price by VanEck’s Sigel

VanEck’s Matthew Sigel analyses the impact of Strategy’s Bitcoin purchases as BTC surpasses $90,000. He highlights that Strategy’s buying generally constitutes a minor market share, with weak correlations to BTC price trends. Despite concerns of market manipulation, broader market conditions likely exert a more considerable influence on price movements, as discussed in light of recent purchases by Strategy.

Matthew Sigel from VanEck has evaluated the influence of Strategy’s (formerly MicroStrategy) Bitcoin acquisitions amidst a notable recovery in the crypto market, as Bitcoin surges over the $90,000 mark for the first time in over a month. Market analysts are investigating how Strategy’s consistent buying behaviours affect Bitcoin’s price dynamics. Sigel’s findings indicate that concerns regarding market manipulation linked to these activities could be exaggerated.

Sigel notes that according to data from TD Cowen, Strategy’s Bitcoin purchases represent only a minor segment of the overall market’s actions. The firm typically accounts for approximately 8.4% of the total weekly purchase volume, although this is impacted by a few high-volume weeks. Generally, its influence remains lower, at around 3.3% on average, and there are several weeks where no purchases occur.

Statistical analysis supports the notion that Strategy’s impact on price trends is quite limited. Sigel identified a mere 25% correlation between the firm’s buying volume and Bitcoin’s weekly closing price. Similarly, the correlation with weekly price changes stands at just 28%, implying that the firm’s purchasing activities do not significantly affect Bitcoin’s short-term price movements.

Additionally, Sigel addresses concerns regarding new Bitcoin supply from mining activities, revealing that the trading volume in the secondary market substantially exceeds mining output, thus diminishing miners’ role in price determination. Even factoring in Strategy’s acquisitions, secondary market transactions are roughly 17 times larger than the total new supply.

The timing of Sigel’s insights comes just after Strategy’s announcement of purchasing 6,556 BTC from April 14 to 20, at an average cost of $84,785 each. This recent buy totals approximately $555.8 million and elevates Strategy’s total holdings to 538,200 BTC, which represents nearly 2.5% of all existing Bitcoin at an average cost of $66,384.

Following this latest investment, Bitcoin’s price notably increased, surpassing the $90,000 threshold to reach $90,718. The asset’s value saw a 3.78% rise today, following a 3% rally yesterday. Although it sparked discussions about whether Strategy’s actions directly influenced this price increase, Sigel suggests that external market conditions and investor sentiment likely played more significant roles.

Critics such as economist Peter Schiff have challenged Strategy’s purchases, alleging that they artificially inflate Bitcoin prices. Schiff has previously warned that such buying behavior could lead to unsustainable price increases, potentially resulting in financial issues if Bitcoin’s value declines.