Hello Everyone,
This week, we're diving into the intriguing supply and demand dynamics shaping the crypto world. A critical factor in Bitcoin's price surge has been institutions buying substantial amounts through ETF products, significantly impacting Bitcoin's circulating supply. This trend shows no signs of slowing, pointing to continued market momentum.
Bitcoin Price: $61,928.79 (+21.44% past 7 days)
Ethereum Price: $3,418.80 (+16.45% past 7 days)
Solana Price: $131.54 (+30.80% past 7 days)
*as of 12:34pm EST 3/1/24
Bitcoin ETFs Hit Historic Daily Milestones as BTC Price Climbs
Bitcoin ETFs are seeing unprecedented daily activity, with Bitcoin's price nearing record highs, reflecting surging investor interest and market confidence.
Record Daily Inflows and Trading Volume: Bitcoin ETFs have experienced historic daily net inflows of $673 million, coupled with a record daily trading volume of $7 billion. These milestones highlight the escalating engagement and liquidity in the Bitcoin investment market.
Bitcoin Nearing All-Time Highs: The rising price of Bitcoin, approaching its historic peak, mirrors the growing investor confidence and substantial capital inflow into the market.
Significance of Daily Records: The extraordinary daily inflows and trading volumes underscore the increasing mainstream acceptance of Bitcoin. These daily records are a clear indicator of the vibrant and dynamic nature of the Bitcoin ETF market.
Significance to WAGMI:
The significant activity in Bitcoin ETFs and the bullish trend in Bitcoin's price echo WAGMI's strategic vision. Beginning in May 2023, we strategically increased our Bitcoin holdings, predicting substantial inflows into ETF products and their potential to drive price appreciation. This aligns with our broader goal of fostering the mainstream adoption of cryptocurrencies and underscores our commitment to identifying opportunities in the digital asset space. These market dynamics validate our approach and highlight the necessity of adaptable and proactive investment strategies in the ever-evolving landscape of cryptocurrency.
Analysis of Bitcoin's Supply and Demand Imbalance
Supply Factors:
Daily Creation: Currently, 900 new Bitcoins are mined (created) each day.
The Halving Event: Scheduled for April 2024, the 'Halving' is a programmed event occurring every four years, reducing the daily Bitcoin creation rate by 50%. This will bring the rate down to 450 Bitcoins per day. Bitcoin miners, who typically sell 95-99% of their mined Bitcoin to cover operational costs like electricity and equipment, add approximately $20 billion of annual selling pressure. The Halving will effectively cut this pressure in half, significantly reducing the available supply.
Investor Holding Trend: Data indicates that roughly 80% of all Bitcoin hasn't been sold for over six months, reflecting strong confidence among long-term investors. This means less than 20% of the total Bitcoin supply is actively circulating in the market.
Demand Dynamics:
ETF Purchases: Bitcoin ETFs are purchasing an average of 4,000 Bitcoins daily, significantly exceeding the daily creation rate.
Rising Investor Confidence: There has been a consistent increase in both trading volume and net inflows into Bitcoin ETFs since their inception, indicating a surge in investor interest.
Regulatory Shifts: The Basel Committee, a key global banking regulator, is set to permit banks to hold up to 2% of their reserves in cryptocurrencies from January 1, 2025. This impending change is likely to greatly increase the demand for Bitcoin and other major cryptocurrencies.
In summary, the combination of reduced supply post-halving and growing demand driven by ETF purchases and forthcoming regulatory changes point to a tightening Bitcoin market. This dynamic suggests significant potential impacts on Bitcoin's price and broader adoption. The Halving event, along with the Basel Committee's decision to allow bank investments in cryptocurrencies, are key drivers likely to fuel further demand against a backdrop of increasingly limited supply.
As always, we're eager to bring you more insights from the dynamic world of cryptocurrency next week. Thank you for staying updated with us. Have a great weekend!
Best regards,
The WAGMI Fund Team
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