Time is Running Out
Disclaimer: I am not a financial advisor, nor do I work within the financial industry. All opinions expressed are my own and not to be taken as financial advice. Talk to a financial advisor to determine the best course of action for yourself and your family.
I decided to write down my thoughts as I have both… exhausted my family’s patience talking about this topic often and said the same thing to multiple people within the span of a few days. That is saying a lot because my family is very patient. There comes a time when you really do need to stop talking and do something different before your loving wife smothers you in your sleep.
If you know me at all, you know I’m talking about Bitcoin. Yes, you have probably heard more than you care to about this topic over the last three months. Everyone has an opinion and it is usually pretty spicy. You either love it or hate it. Frankly, I’ve studied this for years and I only listen to a small group of people on this subject. Those are the ones that I trust will give me good solid information. As they say in the Bitcoin community, “don’t trust, verify.” So here is my take on our current situation in Bitcoin as of April 12th 2023, but do your own research.
There are three things that you should be looking at right now. First and foremost, the liquid supply of bitcoin. Currently, the liquid supply is around one million. This is down from over two million in January when the Spot Bitcoin ETFs were approved by the SEC. You might not realize unless you are listening carefully, but The Spot Bitcoin ETFs are the most successful ETFs in history. Let that sink in for a minute. The asset that Larry Fink called “Rat Poison” just a few years ago is the thing that they are selling like funnel cakes at the Iowa State Fair. On average, over 2000 bitcoin a day are being purchased and only 900 are being mined. The ETFs are like a huge vacuum sucking up all the loose bitcoin that they can find.
Second, the halving is coming in approximately eight days. What is the halving? It is when the mining rewards are reduced in half. So instead of 900 bitcoin a day being mined, it will go down to 450. The obvious effects of this are that prices will increase because the EFTs are still going to continue buying. If they stay at current levels (2000 per day) then the pull from liquid supply will go from 1100 per day to 1550 per day. These are rough numbers but you get the idea. After the halving, the stock-to-flow ratio will be better than gold. Blah, blah, blah, what does all that mean? Prices will go up if the supply decreases.
Third, incoming demand from China and the EU will increase demand. If the news is to be trusted, which it is not, Hong Kong will introduce Bitcoin ETFs next week. In May, the EU will introduce ETFs. Estimates on the demand for Bitcoin ETFs in China are 1 Trillion Yuan. It’s anyone’s guess what demand will look like over the next 30, 60, 90 days. The main point here is that demand globally is increasing. The rest of the world is looking at the success of the US Spot Bitcoin ETFs and rushing to compete. Not only are the financial markets acquiring bitcoin, but governments as well. China, and many other countries, have been quietly mining bitcoin for years.
We are seeing a perfect storm of both demand increase and supply decrease. It is hard to imagine a situation where these things occur and the price does not increase. As I study financial markets more and more the best thing we can do is evaluate opportunity and risk. What is the risk for bitcoin as an asset in light of the preceding information? What is the opportunity for an increase in bitcoin as an asset in light of the preceding information? Everyone has a different situation and must make the right decision for themselves with the assistance of a trained professional. However, I can say for myself that I’m investing in bitcoin and believe that we are at a point in time that will be marked as historically significant. I hope that this information is helpful for those reading it.
