Bitcoin ETF Equilibrium Price Dynamics: ETF likely to drive significant rise in daily demand
We are attaching our deck on Bitcoin ETF equilibrium price dynamics. Please click here to download.
If you have not yet registered for our Crypto Market Update on Tuesday, July 25 at 2pm, please register using the block below.
Executive Summary
- Bitcoin ETF could finally get approved. Sean Farrell sees the “Blackrock effect” making this far more likely today.
- Bitcoin ETF likely one of the largest ever launches. Precious metals ETF > $225 billion. Grayscale, largest asset manager of crypto has $18 billion of Bitcoin AUM.
- Current bitcoin market is in balance with $25 million in daily block rewards and $25 million in daily demand.
- INCREMENTAL ETF DEMAND: Sean believes $25 billion of demand is possible in the first year. This is $100 million in daily demand.
- This would bring daily demand to $125 million, while daily supply is only $25 million. The implied equilibrium price would need to rise so daily supply matches daily demand. Equilibrium analysis suggests that a clearing price is $140,000 to $180,000, before the April 2024 halvening.
- Generally, this idea of higher equilibrium price is consistent Sean Farrell estimates of flow multiplier for Bitcoin of 4X-5X.
Reports you may have missed
Developments since the inauguration confirm that the new administration is prioritizing an industry-friendly regulatory environment. Coupled with an easing DXY/yields, a possible TGA spenddown, and favorable seasonality, we think it’s prudent to maintain a long bias. Source: TradingView, Fundstrat Source: TradingView, Fundstrat POWELL MAKES SOME EDITS When the FOMC statement was first released on Wednesday, it carried a distinctly hawkish tilt. The language reflected a more optimistic view on employment...
Recent developments since the inauguration suggest that the new administration is prioritizing an industry-friendly regulatory environment. We believe there is still significant upside headline risk in the early days of Trump's term. Coupled with an easing DXY/yields, as well as substantial inflows into the crypto ecosystem, we think it’s prudent to maintain a long bias. Source: TradingView, Fundstrat Source: TradingView, Fundstrat THE LAUNCH OF TRUMP COIN This past weekend will...
CORE STRATEGY: REMAINING TACTICALLY CAUTIOUS, TGA RUNDOWN + EARLY JAN FLOWS COULD PRODUCE NEEDED SPARK In our view, this cycle is far from over. However, until bonds find a bottom and the USD peaks, it’s prudent for more tactically-minded crypto investors to remain nimble and ready to capitalize on opportunities once a trend reversal is confirmed. While this could happen as early as next week due to early-January inflows, additional...
CORE STRATEGY: FOCUS ON MAJORS, KEEP HEAD ON SWIVEL UNTIL BONDS/DXY RELENT We think it's right to expect a bounce into year-end, potentially starting tomorrow if PCE data comes in soft. In our view, this cycle is far from over, but until bonds find a bottom and the USD tops, it’s likely best for the more tactical investor to stay nimble and prepared for opportunities upon confirmation of this trend...