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You recognize that zen/blacked out state that Will Ferrel’s character enters in the course of the debate scene of Outdated Faculty?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


Having a spot Bitcoin ETF reside 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 huge cash (suppose: funds that collectively handle tens of trillions of {dollars}).

There’s that…plus:

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

That means giant chunks of Bitcoin’s provide shall be consumed and never made out there once more for a scorching minute.

And positive, there is a complete provide of 21 million Bitcoin, 19M of which has already been launched and at present 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 overall provide, sensibly do over a yr?

Let’s dig in to some numbers…

Positive, 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 worth within the subsequent 12-18 months.

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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 solution to put it’s:

Whereas the overall provide of Bitcoin is price near $1 trillion ($905B to be actual), the current known purchasable provide is simply $87.38B.

Which opens to the opportunity of 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 out there BTC → Bitcoin turns into near-impossible to buy for a time period…

  • Costs go approach 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 larger worth.

And to prime all of it off…

These ETFs are coming at a cut-off date which will properly 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 shall be reduce 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.

Price cuts = cheaper loans/strains of credit score = simpler entry to capital for buyers and extra disposable revenue for day-after-day of us = more cash flowing by the economic system…

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

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