Bitcoin is already back to its all-time high. That's in no small part due to the ETFs. You could even say that for Bitcoin the ETFs are the only game in town at the moment. But can we put a number on the effect of the ETFs? I have received countless versions of the same question. It goes something like that: can we estimate what is the impact of the ETFs inflows on Bitcoin's market cap? Lets see if we can answer this question. The Ecoinometrics newsletter gives you insights from crypto and macro data to help you make better investment decisions. We spend hours every day gathering data, creating metrics and bringing them to life with data visualizations that allow you to quickly get to the heart of things. We then distill all that knowledge in each issue of the newsletter with less words and more charts so that you get insights, direct to the point, in five minutes or less. Join more than 21,000 investors here: Done? Thanks! That’s great! Now let’s dive in. P.S. we have just released a new dashboard on the Bitcoin miners. The purpose of this dashboard is to track if the Bitcoin miners stocks are over priced or under priced relative to Bitcoin. Paid subscribers can check it out here. Can you predict Bitcoin's market cap based on the ETFs inflows?Note: to get a complete data set I stopped this analysis at March 04, more inflows came after that but that won’t change our analysis in a meaningful way. The takeawayBased on the data we have so far we can say that roughly for every $1 billion of net inflows coming from the Bitcoin ETFs, Bitcoin’s market cap grows by $50 billion (or $2.4k added to Bitcoin’s price). The problem is that there is a lot of uncertainty on that number. The error bar is as big as the number itself. So while it looks like there is some quantitative information to be extracted from the relation between the ETFs inflows and Bitcoin’s growth we just don’t have enough data yet. Best we can do is come up with some qualitative rules while waiting for more info. That doesn’t mean you should wait before investing though. There are times when it is just enough to know the direction of the bet even if you are not sure of how far it will go. Average Bitcoins captured per day...Keep reading with a 7-day free trialSubscribe to Ecoinometrics to keep reading this post and get 7 days of free access to the full post archives. A subscription gets you:
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Wednesday, March 6, 2024
Can you predict Bitcoin's market cap based on the ETFs inflows?
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