Mechanism Co-founder Andrew Kang emphasizes the profound impact of a Bitcoin spot ETF on prices, believing that Bitcoin will reach a new historical high next month. He also cites several pieces of data to support his argument.
Bitcoin’s staggering annual net buying flow
Andrew Kang implies that due to his frequent travels to different countries and interactions with entrepreneurs and high-net-worth individuals, he is aware of the global liquidity and how much capital may flow into Bitcoin and cryptocurrencies.
He points out that the total annual income of individuals in the United States is approximately 13 trillion US dollars, and the United States accounts for 25% of global GDP, resulting in a total global personal annual income of approximately 52 trillion US dollars.
With approximately 10% of the global population holding cryptocurrencies, assuming that crypto holders invest 1% of their annual income into Bitcoin, the annual net buying flow of Bitcoin would be 52 billion US dollars, equivalent to a net buying flow of 150 million US dollars per day.
Bitcoin ETF further boosts buying sentiment
Andrew Kang emphasizes that the above data does not yet include the impact brought by a Bitcoin spot ETF:
Everyone seems to have forgotten that the demand for Bitcoin has always existed before these ETFs were approved. Otherwise, how do you think Bitcoin has continued to rise over the past 10 years?
Therefore, he believes that the calculation of net buying flow is already conservative, and the following factors have not been taken into consideration:
Crypto investors may invest 1% of their annual income, but true believers may invest more than 50%, resulting in an average of 3-5%.
The calculation does not include the investment from corporations, macro funds, retirement funds, sovereign wealth funds, and other sources.
Negative selling pressure can’t compare to net buying flow
Andrew Kang also points out that the claims of Mt. Gox creditors, the Bitcoin seized by the US government, and the selling of mined Bitcoin have always been bearish arguments for many people. However, in reality, when measuring net buying flow, these selling pressures are insignificant compared to it.
He calculates the potential selling pressure, including Mt. Gox, to be approximately 17 billion US dollars.
If we consider the annual net buying flow of 52 billion US dollars, along with the buying sentiment from the Bitcoin ETF, it far exceeds these negative selling pressures.
Note: Andrew Kang’s calculations completely disregard investors’ profit-taking, and the data may differ from BitcoinTreasuries.
Bitcoin breaks historical high in March
Andrew Kang emphasizes that the positive impact of a Bitcoin spot ETF cannot be compared to events such as the launch of Bitcoin futures on the CME and the Coinbase IPO. Moreover, there has been a continuous net inflow for several days.
He predicts that Bitcoin will never again drop below $40,000 and will rise to $50,000-$60,000 in February, reaching a new historical high in March.
Andrew Kang concludes by quoting his tweet from October last year, where he urged everyone not to miss the epic rebound, as the Bitcoin price had just surpassed $30,000.
Andrew Kang
Historical high
Bitcoin
Bitcoin spot ETF