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 appears 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 through the debate scene of Previous Faculty?

Brace yourselves. We’re about to go to an analogous place…

*Inhale*

Having a spot Bitcoin ETF stay on US inventory exchanges means a complete new sort of cash can now enter the crypto house (by proxy of the inventory market).

Large cash. Like, silly large cash (assume: funds that collectively handle tens of trillions of {dollars}).

There’s that…plus:

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

That means massive chunks of Bitcoin’s provide will likely be consumed and never made obtainable once more for a sizzling minute.

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

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

Positive, Bitcoin has a tough cap of 21M cash – but it surely’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…

Nevertheless it nonetheless would 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 that can be purchased on crypto exchanges world wide (or $87.38B price).

Or one other method to put it’s:

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

Which opens to the potential for this estimated $50B to $100B of ETF funding, to set off the next state of affairs (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 manner as much as meet demand → which entices holders to promote…

Bitcoin is that can be purchased once more, however nonetheless in restricted portions and at a a lot greater value.

And to high all of it off…

These ETFs are coming at a time limit that will nicely create the ‘good storm’ of decreased provide and elevated in demand.

Provide discount:

In April 2024, the brand new Bitcoin being created/put onto the market every day will likely be minimize 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 occasions in 2024.

Charge cuts = cheaper loans/strains of credit score = simpler entry to capital for buyers and extra disposable earnings for daily of us = extra money flowing by means of the financial system…

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

*Exhale*