A US-based Spot Bitcoin ETF: What It Is and Why It Matters (Written at a 10th Grade Reading Level)

That is neat…however all this nonetheless seems like an overreach – why all of the maddened pleasure over inventory listings?

You recognize that zen/blacked out state that Will Ferrel’s character enters in the course of the debate scene of Outdated Faculty?

Brace yourselves. We’re about to go to the same place…

*Inhale*

Having a spot Bitcoin ETF dwell on US inventory exchanges means an entire new sort of cash can now enter the crypto area (by proxy of the inventory market).

Huge cash. Like, silly huge cash (suppose: funds that collectively handle tens of trillions of {dollars}).

There’s that…plus:

A number of these asset managers are in search of locations to ‘park’ their consumer’s cash, for years at a time.

That means giant chunks of Bitcoin’s provide will probably be consumed and never made obtainable once more for a scorching minute.

And certain, there is a complete provide of 21 million Bitcoin, 19M of which has already been launched and at the moment hovers round $1 TRILLION of complete market worth…

Which suggests the $50B to $100B of estimated funding that these ETFs will see in 2024 will not reeeeally do a lot to maneuver the worth…proper?

What can a purchase order of 5-10% of the whole provide, sensibly do over a 12 months?

Let’s dig in to some numbers…

Certain, Bitcoin has a tough cap of 21M cash – nevertheless it’s estimated that 6M+ of them have been misplaced over time, which implies we’re coping with a complete provide nearer to 15M.

Which is an element…

However it nonetheless does not put sufficient of a dent within the provide to warrant the wild predictions of a $100k-$200k (ETF assisted) BTC value within the subsequent 12-18 months.

What brings these predictions right into a bit extra of a possible actuality is that this:

As of this writing, there’s roughly 1.88 million Bitcoin in the stores on crypto exchanges all over the world (or $87.38B price).

Or one other strategy to put it’s:

Whereas the whole provide of Bitcoin is price near $1 trillion ($905B to be actual), the present recognized purchasable provide is barely $87.38B.

Which opens to the opportunity of this estimated $50B to $100B of ETF funding, to set off the next situation (or one thing prefer it):

ETFs purchase up most/all of the obtainable BTC → Bitcoin turns into near-impossible to buy for a time period…

Costs go means as much as meet demand → which entices holders to promote…

Bitcoin is in the stores once more, however nonetheless in restricted portions and at a a lot greater value.

And to prime all of it off…

These ETFs are coming at a time limit that will effectively create the ‘excellent storm’ of lowered provide and elevated in demand.

Provide discount:

In April 2024, the brand new Bitcoin being created/put onto the market every day will probably be lower in half, from 6.25 BTC launched each 10 minutes, to three.12 BTC.

Elevated demand:

The Federal Reserve has introduced its plans to chop rates of interest a number of instances in 2024.

Charge cuts = cheaper loans/traces of credit score = simpler entry to capital for buyers and extra disposable earnings for day by day of us = more cash flowing by means of the economic system…

A few of which is able to find yourself in Bitcoin and Bitcoin ETFs, rising general demand.

*Exhale*