In a analysis released via . As NewsBTC reported, Grayscale’s GBTC outflows have slowed significantly lately, resulting in a steady net inflow over the past five consecutive days, ranging from $14.8 million to $247.1 million.
The 118 multiplication concept
The core of Young’s analysis hinges on the concept of the ‘118 multiplier’, a metric introduced by Bank of America in March 2021. This multiplier stated that an investment inflow of approximately $92 to $93 million was needed for Bitcoin’s price to increase by 1%. At that time, Bitcoin’s market capitalization was approximately $1.09 trillion, equivalent to a unit price of approximately $58,332.
Young’s prediction revises and modifies this concept, emphasizing its non-static nature. He notes: “The Multiplier is the result of several interacting variables, including the volume and rate of capital inflows, Bitcoin’s easily tradable supply, and external factors that influence risk measures in the broader market.” Thus, it is suggested that the 118x multiplier is a dynamic, rather than a fixed, indicator.
Based on data from HODL15Capital, Young observes consistent growth in Bitcoin ETFs, with an average inflow of 4,193 BTC per day. This translates to approximately $176 million in net new capital every day. For forecasting purposes, Young adjusts this figure to $150 million per day, spread evenly across the trading days of each month (typically 20-23 days).
Bitcoin price could reach $131,000 by EOY
Applying a more conservative multiplier of 50x, as opposed to the original 118x or 100x, Young calculates an estimated monthly upward price pressure of $8,000 per Bitcoin. This calculation leads to a year-end price target of at least $131,000 for Bitcoin. Young states: “This $131,000 represents the lower bound of the forecast, recognizing that actual capital flows may not be uniform and that other factors may increase the multiplier.”
The adjusted analysis also takes into account the irregularities observed in January, in particular the one-off sale of GBTC. Young revised the January data to provide a more accurate picture of the trend for the rest of the year. He suggests: “A rule of thumb: BTC’s daily average gain across all ETFs times $2 provides a conservative estimate of the price impact of ETF growth.”
Based on this model, Young’s monthly Bitcoin price predictions, assuming ETF inflows continue at the levels observed in the first 15 days, are as follows:
- January: $42,000
- February: $50,022
- March: $58,044
- April: $66,448
- May: $74,852
- June: $82,492
- July: $90,896
- August: $99,300
- September: $106,940
- October: $115,726
- November: $123,366
- December: $131,388
This meticulous analysis from Young not only highlights the potential impact of ETF inflows on Bitcoin’s price, but also underlines the complexity and dynamic nature of cryptocurrency markets. However, other events that influence supply and demand dynamics, such as the next BTC halving, as well as macroeconomic developments (Fed rate cuts) are other factors that make price predictions incredibly difficult.
At the time of writing, BTC was trading at $43,021.
Featured image of DALL·E, chart from TradingView.com
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