JAN3 CEO and Bitcoin bull Samson Mow believes that Bitcoin will experience a significant supply shock in the coming days that could potentially trigger its fallout. price will increase to $1 million within a matter of ‘days or weeks.’
The forecast hinges on a perceived supply shock, driven by demand from the recently approved Bitcoin ETFs and a series of market adjustments currently occurring.
Supply shock
The launch of Bitcoin ETFs has already attracted billions in trading volume. At the same time, BlackRock’s acquisition of 11,500 BTC significantly reduced the available market supply within the first two trading days.
The purchase is equivalent to buying 13 days worth of Bitcoin supply, which currently stands at around 900 BTC/day. Experts predict that demand for BTC will increase exponentially, especially if ETFs continue to see significant inflows.
Based on CryptoSlate’s analysis of available BTC supply, if institutions continue to buy BTC at a similarly aggressive pace, it would only take about 120 days for the supply to dry up, making Bitcoin scarcer than at any time in its history.
Further complicating market dynamics is the upcoming Bitcoin Halving, an event that has historically significantly impacted the price by reducing the rate at which new BTC is created. The reward for mining new blocks will be halved from 6.25 BTC to 3.125 BTC in approximately 90 to 120 days.
This, combined with existing demand exceeding supply, could lead to an unprecedented price increase as demand reaches new all-time highs while supply falls to its lowest level in history.
Max pain theory
Mow believes that the markets are likely toMax pain theory” – adapted to traditional financial markets, it suggests a scenario in which Bitcoin’s price movements could result in the maximum financial loss for the largest number of market participants.
The theory, while not formally defined in the cryptocurrency space, generally refers to the price level at which most options contracts expire worthless, causing significant losses for holders. In the case of Bitcoin, this could translate into rapid and extreme price swings, potentially catching many traders and investors off guard.
Mow believes that an important aspect of this theory in the Bitcoin market is the potential for a short squeeze in the coming days. A short squeeze occurs when the price of Bitcoin rises unexpectedly, forcing those betting against it (short sellers) to buy back at higher prices to limit losses, driving the price up further.
The concept of maximum pain also ties in with the unpredictability of Bitcoin’s price movements and market psychology. Bitcoin has a history of defying conventional market expectations, and a scenario that causes the greatest financial pain for the greatest number of market participants is consistent with its volatile and unpredictable nature.
According to Mow, a rapid rise to $1 million would disrupt the strategic plans of many, including nation states and companies looking to invest in Bitcoin. It could also impact the usability of the Lightning Network due to its high costs and break the Stock-to-Flow (S2F) model that many use to predict Bitcoin’s value.
Mow also commented on an additional set of events that would occur if Bitcoin reached the $1 million price too quickly, including:
One of the most important consequences would be for the old financial system, which according to Mow is not prepared for a rapid reorganization around Bitcoin.
At the time of writing, Bitcoin is number 1 in terms of market capitalization and so is the BTC price down 2.04% in the last 24 hours. BTC has a market capitalization of $823.32 billion with a 24-hour trading volume of $16.62 billion. More information about BTC ›
Market summary
At the time of writing, the global cryptocurrency market is valued at $1.65 trillion with a 24-hour volume of $46.95 billion. Bitcoin’s dominance currently stands at 49.73%. Learn more >
