That’s nice… but all of this still feels like overkill – why is all the crazy excitement over stock mentions?
You know that zen/blackout state that Will Ferrel’s character gets into during the debate scene from the old school?
Brace yourself. We’re about to go to a similar place…
*Breathe in*
Having a spot of Bitcoin ETF live on US exchanges means that a whole new kind of money can now enter the crypto space (by proxy of the stock market).
Big money. Like it, stupid big money (think of funds that collectively hold dozens of trillions of dollars).
There’s that…plus:
Many of these asset managers are looking for places where they can ‘park’ their clients’ money for years.
This means that large portions of Bitcoin’s supply will be consumed and unavailable for a hot minute.
And sure, there is a total supply of 21 million Bitcoin, of which 19 million have already been released and currently hovers around $1 trillion in total market value…
That means the estimated $50 billion to $100 billion in investments these ETFs will see in 2024 won’t increase. Real do a lot to move the price… right?
What can a purchase of 5-10% of the total supply, wise do for over a year?
Let’s look up some numbers…
Sure, Bitcoin has a hard limit of 21 million coins, but it’s estimated that over 6 million coins have been lost over the years, meaning we’re looking at a total supply closer to 15 million .
What is a factor…
But it still doesn’t make enough of a dent in supply to justify wild predictions of a BTC price of $100,000-$200,000 (ETF-backed) over the next 12 to 18 months.
What makes these predictions a little more of a potential reality is this:
At the time of writing, there are approximately 1.88 million Bitcoin available to buy on crypto exchanges around the world (or $87.38 billion worth).
Or another way to say it is:
While the total supply of Bitcoin is worth almost $1 trillion ($905 billion to be exact), the… currently known salable the supply is only $87.38 billion.
This opens up the possibility that this estimated $50 billion to $100 billion in ETF investments triggers the following scenario (or something similar):
-
ETFs buy up most/all available BTC → Bitcoin becomes virtually impossible to buy for a period of time…
-
Prices go up a lot to meet demand → prompting holders to sell…
-
Bitcoin is available to buy again, but still in limited quantities and at a much higher price.
And to top it all off…
These ETFs come at a time that could create the “perfect storm” of reduced supply and increased demand.
Reduction of supply:
In April 2024, the new Bitcoin created/released every day will be halved, from 6.25 BTC released every 10 minutes to 3.12 BTC.
Increasing demand:
The Federal Reserve has announced its plans to cut interest rates several times in 2024.
Interest rate cuts = cheaper loans/lines of credit = easier access to capital for investors and more disposable income for everyday people = more money flowing through the economy…
Some of that will end up in Bitcoin and Bitcoin ETFs, increasing overall demand.
*Exhale*
