3 Shocking Bitcoin Supply Theories – #2 You Won’t Believe

The recent development has attracted the interest of both cryptocurrency investors and analysts. The incredible demand for spot Bitcoin ETFs (exchange-traded funds) in the United States, coupled with the expected slowdown in new BTC circulation after the upcoming halving event, is set to create a potentially significant supply shock. Changing the cryptocurrency market.

As speculation heats up, experts weigh plausible theories that provide insight into the future of Bitcoin's price and its implications for the global economy.

Theory 1: Bitcoin ETF Inflows Drive Demand

Mark van der Chijs, a Dutch entrepreneur and global investor who keeps an eye on the cryptocurrency market, has provided an in-depth analysis of Bitcoin, taking into account recent developments in ETFs and the Bitcoin halving event. His observations provide an overview of market demand, supply constraints, and bitcoin's price trajectory.

Van der Chijs highlighted the significant impact of the Bitcoin ETF influx on the price of the cryptocurrency. He pointed out that there is a direct correlation between these earnings and daily price increases, with a 2% increase in the price of Bitcoin being the demand associated with ETFs. This is particularly important in the United States during periods of pre-market settlement, where the announced revenue stream preemptively inflates the price.

One of the interesting aspects of van der Chijs's analysis is his identification of “market efficiency”. This inefficiency is due to the predictable nature of price increases after ETF earnings announcements. Van der Chijs acknowledged the gains in trading this pattern, highlighting the impact of ETFs on Bitcoin.

Van der Chijs delves further into the supply-demand imbalance exacerbated by ETF revenues. He pointed out that demand for ETFs far outstrips the newly created supply of bitcoins. Therefore, it creates a situation where prices go up because sellers charge higher prices.

This imbalance is expected to be halved with the upcoming Bitcoin mining rewards. The daily supply of new bitcoins will be halved, further accentuating the supply shock.

“I think we're in this range, but an average increase of $1,000 per trading day in the coming weeks is very likely… which means we'll see a new all-time high unless it's a black swan event. Halve that, and we could reach $100,000 in the next 2 to 3 months, Van der Chij explained.

Theory 2: Unpredictable global wealth flows

Andrew Kang, co-founder of Mechanism Capital, offered a broader view of Bitcoin's potential growth. It highlighted the underappreciated amount of global wealth flowing into cryptocurrencies. Kang's analysis predicts long-term demand for Bitcoin driven by massive income and wealth worldwide.

Kang used total US household income as a starting point. He proposed a staggering $52 trillion in global investment power. This figure highlights the vast pool of capital that can flow into cryptocurrencies far beyond what many investors currently realize.

Even with a conservative estimate of 1% global income Bitcoin allocation, this translates to approximately $52 billion in purchasing power for BTC, or $150 million per day. This estimate does not include large allocations that enthusiasts and institutional investors may make.

Read more: Bitcoin price prediction for 2024/2025/2030

Kang touched on the volatility of Bitcoin ETFs in the market. Before these ETFs were approved, there was a consistent interest in Bitcoin, which contributed to its rise as a trillion-dollar asset. The introduction of ETFs is expected to further increase this demand. Especially since the daily earnings are higher than the initial estimate, which hints at the potential for more daily investment totals.

I still believe that this ETF launch cannot be compared to previous events like CME futures, Coinbase IPO, etc. And we never spend less than $40,000. [We will see] 50,000 to 60,000 dollars in February, and one [all-time high] In March,” Kang said.

Theory 3: Long-term institutional flow

Rick Edelman, founder of the Digital Assets Council of Financial Professionals, brings a forward-looking perspective to the flow of institutional and individual advisory investments, particularly through ETFs. His argument is built on the role of digital assets in anticipation of a major shift in financial advice.

Edelman highlighted the growing interest of independent financial advisors, who collectively manage nearly $8 trillion in assets, to allocate a portion of their portfolios to Bitcoin ETFs. This change reflects the wider acceptance and recognition of the potential of digital assets to diversify investment portfolios and improve returns.

Citing industry surveys by the Digital Assets Council and Bitwise, Edelman noted that three-quarters of advisors are willing to allocate to Bitcoin ETFs. This consensus among advisors reflects growing confidence in the stability and future growth of digital assets, despite the inherent volatility and regulatory framework that still governs them.

Doing some simple math, the survey predicts that by the end of 2025, more than $150 billion will go into digital assets in total. This figure comes from an average of 2.5% of assets under management with 77% of independent advisors.

Such a large amount of capital inflows will confirm the cryptocurrency market as a major source in investment portfolios and can significantly increase the value and liquidity of Bitcoin.

“In the year By the time we get to the end of 2025, we're talking 2 years, we'll see over $150 billion in total revenue. We only have $5 billion now,” Edelman said.

Collectively, these three theories show a significant trend. Bitcoin's supply shock is a reflection of deeper economic forces at play.