Predicted Upward Trajectory for Bitcoin as Analyst Factors in Surging ETF Demand and Scarcity

Bloomberg’s Senior ETF Analyst Eric Balchunas predicts a potential short-term hype cycle for Bitcoin driven by surging demand from newly launched exchange-traded funds (ETFs) in the U.S. and dwindling available supply. 

Balchunas explains that the scarcity of Bitcoin coupled with ETF demand influences its float and subsequently drives prices upward, potentially sparking a self-reinforcing cycle. Tracking the launch of Bitcoin spot ETFs closely, Balchunas had initially estimated inflows of $10-15 billion but notes that ETFs have already reached $7 billion in just a month, hinting at the potential for multiples of his forecast. 

He compares the current ETF activity to past market manias like Ark Invest, cautioning about the sustainability of the current pace of inflows, which could reach unprecedented levels. Despite impressive ETF volumes, Balchunas emphasizes the importance of distinguishing organic demand from sudden surges driven by large fund injections.

Clever Robot News Desk 1^st March 2024