Whenever institutional purchases previously reached 500% of miners’ daily production, BTC saw gains of 24% on average over the following month.
Institutions are buying Bitcoin (BTC) at a rate more than five times the production rate of miners, and according to Capriole Investments founder Charles Edwards, this gap has historically occurred just before huge price gains.
In a May 4 post, Edwards said that each instance in the past of this demand/supply ratio produced an average return of 24% over the following month, which from current levels would bring BTC to around $96,000.
What the data shows
The 500% figure comes from tracking daily institutional purchases, primarily by public companies and ETFs, compared to the roughly 450 BTC mined each day since the 2024 halving.
“Every time it’s been this high before, the price has skyrocketed over the next week,” Edwards said. “The average return in previous cases is +24% one month from here, which would bring it to around $96,000.”
Earlier today, Bitcoin surpassed $80,000 for the first time since January. According to CoinGecko, it has been trading at levels between $78,000 and $80,500 over the past 24 hours and is up 20% over the past 30 days.
This surge triggered a wave of forced liquidations, which resulted in the loss of more than $162 million in short positions in 24 hours, according to CoinGlass data.
Trading volume also jumped 95% in 24 hours to around $34 billion.
Other analysts have added weight to the bullish hypothesis, although with varying degrees of conviction. For example, trader Taiki Maeda wrote that he expects Strategy to buy $2 billion to $3 billion worth of Bitcoin over the next two weeks through its STRC instrument, with acquisitions likely to “accelerate through May 14.”
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For his part, chartist Ali Martinez pointed to a multi-decade ascending trendline from which BTC has rebounded in 2017, 2018, 2020, and 2022, arguing that the recent drop to $65,000 suggests that “bottom may be reached.”
The other side of the coin
BTC’s surge above $80,000 follows a 12% surge last month, but according to CryptoQuant, the increase was fueled almost exclusively by perpetual futures interest, not spot trading.
He noted that Bitcoin’s apparent demand indicator, which tracks on-chain spot activity over 30 days, remained negative throughout the April rally.
“The divergence between rising prices and contracting spot demand is one of the clearest on-chain signals that price gains are speculative rather than structural,” the company wrote, adding that this demand structure reflects what was observed at the start of the 2022 bear market.
