Seven days after the new Bitcoin ETFs launched, I analyzed how they may put stress on Bitcoin’s supply dynamics in an article known as “If BlackRock continues 6k BTC each day buys, we get a supply crunch inside 18 months; right here’s why.’ On the day of publication, Jan. 18, Bitcoin closed at $41,248 after falling from a excessive of $49,000 on Jan. 11. Since then, the flagship digital asset has soared 37% to interrupt $57,000.
Whereas Bitcoin had fallen persistently after the ETF launched, CryptoSlate famous the persistent BTC inflows, which, at the time, averaged round 6,266 BTC per day for BlackRock alone. The evaluation recognized that have been such inflows proceed, the liquid supply of Bitcoin might be absorbed this 12 months, with the change balances or very liquid provides targetable by mid-2025.
As famous at the time, the evaluation was purely hypothetical and didn’t contemplate the outflows from Grayscale GBTC. Moreover, it solely checked out BlackRock, the largest fund’s inflows, to simplify the information at that time. The train aimed to emphasise the potential for a supply squeeze and the lack of liquid Bitcoin to facilitate persistent ETF stress on the supply. On Jan. 18, BlackRock had 25,067 BTC underneath administration, valued at $1 billion.
Apparently, whereas the inflows into BlackRock didn’t preserve the 6,266 BTC each day common stress, inflows into the New child 9 have surpassed this stage. BlackRock presently has 130,231 BTC underneath administration, whereas the fund would have 275,707 BTC if it continued at 6,266 BTC each day. Nevertheless, on Jan. 18, 6,266 BTC was valued at $258 million, which might now symbolize an influx of $357 million, given the dramatic worth surge.
It’s essential to keep in mind that the spot Bitcoin ETFs are bought with {dollars} and denominated in {dollars} in a brokerage account. Thus, whereas inflows into the ETF have been constant in greenback phrases, they’ve been diminished when it comes to Bitcoin purchases.
Throughout the New child 9, 303,002 BTC is now held underneath administration per K33 Analysis. Taking a look at the CryptoSlate desk used for the Jan. 18 article, this aligns with inflows projected for BlackRock by March 2, 2024.
Utilizing this information, ought to the New child 9 proceed to soak up Grayscale’s declining outflows and buy extra Bitcoin from the broader market at this tempo, 1 million BTC might be underneath administration by June. Additional, this charge would swallow the BTC equal of the whole present liquid supply of Bitcoin (roughly 1.3 million BTC) by September.
On Feb. 8, I mentioned the potential for the ‘Mother of all Supply Squeezes‘ for Bitcoin, which is akin to the GameStop saga but even more effective. The price has surged 29% since that article went live in just 19 days, an average of 0.65% per day. Bitcoin ETFs have continued to buy, and Grayscale’s outflows are slowing.
The necessities for a supply squeeze seem like current; the solely query I see is, at what stage does the demand turn out to be affected by the worth? Do Bitcoin ETF purchasers proceed to purchase if Bitcoin is at $100,000? Properly, at that worth, BlackRock’s IBIT can be round $60 per share. That doesn’t sound fairly as costly to new buyers now, does it?
