Bitcoin ETF purchases surpass daily production by 12.5 times, says Anthony Pompliano.
According to Anthony Pompliano, Wall Street is currently buying Bitcoin at a rate that is 12.5 times higher than its daily production, indicating a strong interest in the cryptocurrency. Pompliano made these remarks during an appearance on CNBC’s Squawk Box, stating that “Wall Street LOVES bitcoin. They are buying up 12.5x more bitcoin per day than the network can produce.” This surge in institutional demand for Bitcoin comes as the cryptocurrency approaches its halving in mid-April, where the rate of new Bitcoin creation will be cut in half, potentially leading to a further imbalance between supply and demand.
In early 2024, the U.S. Securities and Exchange Commission (SEC) approved the first batch of spot Bitcoin ETFs in the United States. However, instead of experiencing an immediate increase in price as expected, Bitcoin actually dropped by 20% in January after the ETFs were introduced. This decline can be attributed to various factors, including investors taking profits after Bitcoin’s price had surged by 200%, as well as sales from Grayscale’s GBTC.
Despite this initial drop, ETF providers saw an opportunity to increase their Bitcoin holdings at lower prices. Grayscale currently leads the way with over 475,000 BTC, while BlackRock and Fidelity have also significantly added to their holdings, with more than 70,000 and 60,000 BTC respectively. Other companies such as ARK, Bitwise, Invesco Galaxy Bitcoin Trust, and a consortium consisting of VanEck, Valkyrie, Franklin, and WisdomTree, have collectively acquired over 174,000 BTC. These acquisitions account for almost 1% of the total circulating Bitcoin supply.
The aggressive acquisition of Bitcoin by ETF providers following the introduction of Bitcoin ETFs demonstrates the supply and demand dynamics in the market, which is now propelling Bitcoin to surpass $50k. With the supply of Bitcoin expected to decrease further after the halving, and institutional investors driving the demand higher, analysts like Pompliano believe that the price of Bitcoin could reach new yearly highs.
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