Bitcoin ETF Equilibrium Price Dynamics: ETF likely to drive significant rise in daily demand
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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.
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