I had a rant in a friends’ group tonight, mostly with fiat friends. The background is that one of them was really surprised to learn that I firmly believe we will reach new All-Time High in the price of Bitcoin. So here is my rant:
Here are some thoughts on what affects the price of Bitcoin: primarily, it revolves around supply and demand.
Supply: Every 10 minutes, 6.25 BTC are mined. In the beginning, it was 50 BTC, but mining is halved approximately every 4 years. If you look at a price chart from the beginning, you’ll notice a significant price increase after each halving.
However, until around 2020, the number of available bitcoin for purchase on exchanges kept increasing. But then, this trend reversed. More people began buying and withdrawing bitcoin from exchanges, resulting in a decrease in the so-called ‘liquid supply.’
In just the last quarter, the number of bitcoin on exchanges has decreased by approximately 78,000 bitcoin. Since the peak, the ‘liquid supply’ has been reduced by about 1.04 million bitcoin.
Next year (around April), mining will halve again to 3.125 BTC every 10 minutes. For the first time in history, we will experience a simultaneous reduction in the number of new bitcoins and a reduction on exchanges.
This was a brief insight into the supply side.
On the demand side: BlackRock, the world’s largest asset manager, and many other major players are seeking approval to launch ETFs that include Bitcoin in the USA. This opens the door for billions of dollars to flow into Bitcoin when someone purchases such a spot ETF. ETF issuers must acquire the underlying asset, in this case, BTC.
Why are they doing this? Larry Fink, the CEO of BlackRock, has stated that they are doing it because their customers want it. This includes not only individual investors but also institutions, pension fund managers, and wealthy individuals. The fact that Larry Fink compares Bitcoin to gold and labels it a ‘digital store of value’ contributes to changing the perception of Bitcoin as an investment. BlackRock has given its approval.
Furthermore, BlackRock has been a pioneer in ESG (Environmental, Social, and Governance) assessments of investments and has profited significantly from it. They now no longer view Bitcoin as a problem for the environment, governance, or society.
Additionally, accounting rules for companies purchasing BTC in the USA are changing, starting from December 15, 2023 (voluntarily) and becoming mandatory from 2024. Previously, companies had to book the value at the lowest price since the purchase. If the price went up, they couldn’t adjust the value until they sold. From December 15, they can book the market value, changing the opportunities for companies with available capital to invest in Bitcoin.
This was a brief overview of the demand side.
The supply side is fixed; we know how many Bitcoins will be mined. The demand side is, of course, more uncertain, but there may be conditions for a significant upturn after the next halving.
Although BlackRock hasn’t received approval for ETFs yet, the final deadline for the US Securities and Exchange Commission (SEC) is around mid-January 2024. Out of about 500 ETF applications, BlackRock has only been rejected once in history.
Furthermore, the SEC recently lost a lawsuit against another company that had been denied. The judge stated that the SEC didn’t have sufficient reasons to reject the application, so the SEC must reconsider the application and potentially provide new reasons for a rejection.
Of course, investing in Bitcoin is akin to buying a lottery ticket. It’s important not to borrow money and to invest only what you can afford to lose. Nevertheless, some prefer to invest in BTC rather than playing the lottery.
For example, 100 kr in lottery tickets every week results in 52,000 kr over 10 years. Compared to 52,000 kr invested in BTC through weekly purchases on the ‘Bare Bitcoin’ platform. Where is the greater chance for a substantial gain?
However, it’s important to remember that Bitcoin is still a relatively new investment, and there is risk involved.
BobbyBuckle
npub1h9…qperu
2023-10-11 22:13:59
Author Public Key
npub1h9cm6hsf6ewv3qed8dee5h00qd63fhdpy8d0n7q4kwfs7mlmraxqaqperuPublished at
2023-10-11 22:13:59Event JSON
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"content": "I had a rant in a friends’ group tonight, mostly with fiat friends. The background is that one of them was really surprised to learn that I firmly believe we will reach new All-Time High in the price of Bitcoin. So here is my rant:\n\nHere are some thoughts on what affects the price of Bitcoin: primarily, it revolves around supply and demand.\n\nSupply: Every 10 minutes, 6.25 BTC are mined. In the beginning, it was 50 BTC, but mining is halved approximately every 4 years. If you look at a price chart from the beginning, you’ll notice a significant price increase after each halving.\n\nHowever, until around 2020, the number of available bitcoin for purchase on exchanges kept increasing. But then, this trend reversed. More people began buying and withdrawing bitcoin from exchanges, resulting in a decrease in the so-called ‘liquid supply.’\n\nIn just the last quarter, the number of bitcoin on exchanges has decreased by approximately 78,000 bitcoin. Since the peak, the ‘liquid supply’ has been reduced by about 1.04 million bitcoin.\n\nNext year (around April), mining will halve again to 3.125 BTC every 10 minutes. For the first time in history, we will experience a simultaneous reduction in the number of new bitcoins and a reduction on exchanges.\n\nThis was a brief insight into the supply side.\n\nOn the demand side: BlackRock, the world’s largest asset manager, and many other major players are seeking approval to launch ETFs that include Bitcoin in the USA. This opens the door for billions of dollars to flow into Bitcoin when someone purchases such a spot ETF. ETF issuers must acquire the underlying asset, in this case, BTC.\n\nWhy are they doing this? Larry Fink, the CEO of BlackRock, has stated that they are doing it because their customers want it. This includes not only individual investors but also institutions, pension fund managers, and wealthy individuals. The fact that Larry Fink compares Bitcoin to gold and labels it a ‘digital store of value’ contributes to changing the perception of Bitcoin as an investment. BlackRock has given its approval.\n\nFurthermore, BlackRock has been a pioneer in ESG (Environmental, Social, and Governance) assessments of investments and has profited significantly from it. They now no longer view Bitcoin as a problem for the environment, governance, or society.\n\nAdditionally, accounting rules for companies purchasing BTC in the USA are changing, starting from December 15, 2023 (voluntarily) and becoming mandatory from 2024. Previously, companies had to book the value at the lowest price since the purchase. If the price went up, they couldn’t adjust the value until they sold. From December 15, they can book the market value, changing the opportunities for companies with available capital to invest in Bitcoin.\n\nThis was a brief overview of the demand side.\n\nThe supply side is fixed; we know how many Bitcoins will be mined. The demand side is, of course, more uncertain, but there may be conditions for a significant upturn after the next halving.\n\nAlthough BlackRock hasn’t received approval for ETFs yet, the final deadline for the US Securities and Exchange Commission (SEC) is around mid-January 2024. Out of about 500 ETF applications, BlackRock has only been rejected once in history.\n\nFurthermore, the SEC recently lost a lawsuit against another company that had been denied. The judge stated that the SEC didn’t have sufficient reasons to reject the application, so the SEC must reconsider the application and potentially provide new reasons for a rejection.\n\nOf course, investing in Bitcoin is akin to buying a lottery ticket. It’s important not to borrow money and to invest only what you can afford to lose. Nevertheless, some prefer to invest in BTC rather than playing the lottery.\n\nFor example, 100 kr in lottery tickets every week results in 52,000 kr over 10 years. Compared to 52,000 kr invested in BTC through weekly purchases on the ‘Bare Bitcoin’ platform. Where is the greater chance for a substantial gain?\n\nHowever, it’s important to remember that Bitcoin is still a relatively new investment, and there is risk involved.",
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