➡ The surge in Bitcoin price is attributed not only to news of potential ETF approval, but also to the tight supply of Bitcoin, the decline in large holders, and increased small-entity accumulation. The technicality of a “squeeze,” where short-sellers have to buy to cover their positions, thereby raising the price further, also contributes heavily to the price hike.
➡ In December 2022, Grayscale Bitcoin Trust traded at almost a 50% discount, allowing buyers to purchase Bitcoin at half its market price. As of now, the discount shrunk to 12.5% due to expectations of the trust converting into an ETF, attributed largely to the United States Court of Appeals mandate insisting on a review of Grayscale’s Bitcoin ETF application. Additionally, BlackRock made strides towards acquiring approval for its own Bitcoin ETF, obtaining a CUSIP number and being in preparation to start seeding the ETF. The potential introduction of Bitcoin ETFs is influencing Bitcoin markets, as seen in ascending Bitcoin prices, which may outpace current models due to the global macro picture and the upcoming Bitcoin halving cycle in which Bitcoin supply will be halved again.
➡ The volatility in the treasury and bond markets suggest a systemic risk, however the divergence between gold prices and real rates point towards a growing distrust of fiat currency and preference for assets like gold, real estate, and Bitcoin. Larry Fink from BlackRock attributes the surge in Bitcoin prices to increasing interest in cryptocurrency as a safe haven amid geopolitical tensions. If approved, ETFs could lead to a huge inflow of funds into the market, raising the market cap significantly, but a potential market crash might still bring the prices down. An advisable strategy for investing could be dollar cost averaging or lump-sum investment based on personal risk assessment.

The real reason that bitcoin’s price is pumping. Now, unless you’ve been living under rock, you already know that the bitcoin price has been exploding. It’s up a hundred percent this year, and it’s up 1015 percent in just the last few weeks. Now, the surface level story is that it’s because of this ETF news that’s coming out, which is part of it, but there’s something much bigger going on, something under the surface that’s really driving this.

And so in this video, I’m going to break down sure, we’ll talk about this ETF news. We’ll break down some of the math to show you how little money moved into the market and how much it’s moved. We’ll break that down. But we’re also going to dig into the deeper underlying issue of why the bitcoin price is really moving and what you can expect from here and what you should be doing.

Should you buy now or wait? We’ll cover all that and more in this video. So let’s go. All right, welcome to the channel. If you’re new, my name is Mark Moss. I make these videos to change the way you think about money because almost everything you’ve learned is wrong. And if you’re only looking at news headlines, what you’re also seeing, what you’re reading is probably wrong as well.

But don’t worry, we’re going to break this down, make it easy to understand and even actionable. So you know what to do. All right. Now, like I said, we’re talking about the price of bitcoin, why did it pump, and we’re going to get to the real underlying reasons in that. But of course, unless you’ve been living under a rock, you know the price is splurging. It’s going higher.

Now, there was a previous fire drill, meaning we saw an example of this before, but it was a fake out. So what am I talking about? A few weeks ago, we got a pump on the price of bitcoin when a tweet went out from Cointelegraph saying that the ETF, the BlackRock ETF was approved. That’s an exchange traded fund. Everybody’s been waiting for this ETF from BlackRock. Or there’s several other entrants that could possibly get into the market as well for ETFs.

But as soon as that happens, people think there’s going to be a massive inflow of money coming into the market which will push the price of bitcoin up. I’m going to break that down for you in a minute. But a few weeks ago, we saw a tweet went out here’s, a copy of the tweet, and it said, breaking the SEC approves the ishares bitcoin spot ETF. Now, when that happened, it got 1.

6 million views. And you can see what happened right here with the price of bitcoin. It pumped. It went right up. Now, this was lasted for about 30 minutes before they deleted the tweet. They said, hey, we are wrong. They deleted the tweet. And you can see the price of bitcoin came back down, not all the way to where it was. It kept some of the pump, but you can see exactly what happened.

What happened in that was a couple of things. So, first of all, as the price started going up, part of the reason why it exploded so much higher is because it starts to unwind shorts that were there. As a matter of fact, according to data from Coinglass, $105,000,000 in positions were liquidated in that pump. So that Tweet cost people a lot of money. As a matter of fact, 100 million in the past day, 40,000 traders have been liquidated.

So that was just in the hour. 100 million in the hour. Over the next four days, traders were liquidated for nearly 180,000,000. So people were betting the price would go down. So they had shorts. As the price went up, they got liquidated, which caused the price to go up even farther. Now, that was a $2,000 move and liquidated $180,000,000 worth of positions. That was a fire drill. But now we have the next drill coming.

And what we can see now is that the price is very volatile. So we know that supply or price is always the equilibrium of supply and demand. And so when we have the demand very, very tight or the supply very tight and the demand goes up, big moves can happen. Part of it is because what’s known as this squeeze I want to break this down for you. So what happens in a squeeze is that we have option traders or people betting that the price would go down to break this down.

I have this Tweet here from Alex Thorne, and he said that when dealers are short so these are the futures dealers, or when they’re long, they need to buy Spot to stay delta neutral. So, what does that mean? That means if I short the price but the price moves up, I have to buy it at that new, higher price because I have to cover my short position. Now, if I’m short and the price moves up and it forces me to buy, that pushes the price up even more, which then makes more people have to cover and buy, which pushes the prices up even higher.

So that’s sort of how this gamma squeeze works. This is a great setup for bulls because if spot if the Spot price moves moderately higher, the short gamma covering, so people that are having to cover the shorts could make it rip much higher pretty quickly. So as it moves up, they’re forced to buy, which makes it move up even faster is what he’s saying. Long gamma covering could provide some support limit near term downside.

So, what he’s saying is that as the price goes up, people have to buy so it goes up much more rapidly. But if the price goes down, they set a floor. So that makes our risk reward ratios of going up much better than the price going down. So that’s sort of how that works. You can see in this other tweet, he provided a chart here, and it says, why might spot move higher? So why would the price move higher in the near term? Now, this is before this last pump.

Okay, so why might it go up in the near term? An anticipation of a bitcoin ETF approval is heating up. So people are expecting that. And again, this was right here in the pump before it happened, and that’s exactly what seemed to be happening. But he lays out the dynamics right here, which is pretty important. Bitcoins currently constrained supply and liquidity. So remember, price is the equilibrium of supply and demand.

So if what he’s saying here constrained supply and liquidity, there’s not much supply. It’s constrained. It’s very tight. So if we get an increase in the demand, the price could move up exponentially. Now, we can see right here, he’s given a couple of reasons here. That the exchange balances. So the amount of bitcoin that’s on the exchange, this is the liquid supply. The amount that’s available, the exchange balances are at levels not seen since 2018.

Now, why is that important? Well, bitcoin that’s on exchanges is liquid. That means people are probably buying and selling it. They’re probably ready to sell it or trade it. Bitcoin that’s off, the exchanges that’s put in cold storage is typically long term. It’s a pain to get that on and off. So we consider that more long term. So we’re looking at the supply. It’s the lowest level. The liquid supply is the lowest level since 2018.

Smaller entities have been accumulating while wells have been declining. Now, the reason why that’s important, we’re starting to see more small wallets of bitcoin holders popping up. And the reason why that’s important is we get more of a decentralized holder base. So we don’t have this big well, that can dump on the market. Holders be holding 70% of the supply. So 70% of all the bitcoin out there has not transacted in over one year.

30% of the supply hasn’t moved in over five years. So that means about 70% of all the bitcoin out there hasn’t moved in over a year. So those are long term holders. They held through that massive dip, through that pain. They’re probably not going to be selling. So this means the supply is very, very low. We can see the on exchange bitcoin volume for September 2023 was the lowest month since December of 2016, 2016.

So the liquidity is very, very low. When liquidity is that low, like I said, a little bit of increase in demand makes the price move exponentially. And that’s what happened. So now we have the real thing happening. Here comes the real ones. Now, we’ve been looking at several ETFs that are on the radar of coming through. I think the BlackRock one is the most likely one to go through because BlackRock’s, sort of like this quasi arm of the government, if you will.

However, we’ve also been paying attention to this one from Grayscale. Now Grayscale is a trust. It’s a bitcoin trust. It works sort of similar as an ETF. I don’t want to get into technical details of the differences, but it’s the same way where it allows people to buy into bitcoin through their normal stock trading accounts. Now, the Grayscale bitcoin trust was trading at a massive discount back here in December of 2022.

It was a 48%, almost a 50% discount to the price. So what this means is if you would have bought bitcoin through the Grayscale bitcoin trust in December of 2022, you would have bought bitcoin at 50% off of the price at the time. Now since that time we’ve seen this gap get closed up and as a matter of fact, right now we’re at about twelve and a half percent.

Now, why is this going from 50% to twelve? It’s because people think that the Grayscale trust will be converted into an ETF, and it’s very likely that it will be. Now today you could still buy bitcoin at a twelve and a half percent discount by buying it through the trust. And we can see the reason why is because of the lawsuits that were happening. As a matter of fact, a judge throughout the SEC’s case on the Grayscale trust, they’ve since appealed it.

And we can see here the United States Court of Appeals has issued a mandate following the decision requiring Grayscale investments, applications for a spot bitcoin exchange traded fund to be reviewed. So the SEC says, we’re not even going to look at this, we’re just going to put it on the table and ignore it. But the Court of Appeals issued a mandate and said the SEC has to, you have to review this.

You don’t have to approve it, but you have to approve it. The formal mandate of the court took effect, paving the way for the SEC to review its decision on Grayscale spot bitcoin ETF following the court’s initial ruling. So it doesn’t mean the SEC has to approve it, but they have to at least review it. And the heat has been turning up. It’s only a matter of time before we actually see it approved.

And that’s exactly what we’re starting to see again with BlackRock. So we can see right here, BlackRock this week obtained a CUSIP number. That number is so that they could list their ETF. Well, we can see here BlackRock recently updated its ETF filing and there were two amendments to the filing. The first one is they obtained this number, the CUSIP number. It’s a unique ID that gets assigned to all securities in the US.

And Canada. So why would they be assigned a number if they weren’t getting close to being approved? Second one they did is they may start seeding the ETF this month. What does that mean? When they open up the ETF, they can start buying bitcoin to start putting in there. And that’s exactly what happens when this initial funding is provided by a bank broker dealer. It’s used to purchase a few creation units.

So typically when you start a new corporation, you open a bank account, you got to put a little bit of money in. Sort of the same thing with this new ETF, they had to purchase a few creation units, in this case, bitcoin. So these two things happened. We can see the fact that BlackRock is this far along with both of these things, is a very positive sign that a spot bitcoin ETF could be coming.

If anybody’s going to get it through, it’s going to be BlackRock. So to see them taking this forward action means a very big deal. Now, we also saw the DTCC. The DTCC is what lists the stocks. And what we can see here, there was a DTCC filing where they actually listed this ticker with the dollar sign IBTC. Yesterday BlackRock’s ETF called ishares bitcoin trust, appeared on the DTCC website and had this trading ticker.

So you can see it right here. Now, what’s interesting is, as I was getting ready to do this video, the ticker went off of the listing and then it came back on and it was like going up and down. I’m not exactly sure why, but it appears there might be some funny business going on there. Now, if we look at a chart, here what we can see. This is the bitcoin price.

This pump right here is when the fake out happened. The tweet got put up and 30 minutes it got taken down. You can see it went up and then it sort of came back down, but at a new higher level. Then this candle right here, some were calling it a god candle because it’s so big. This candle right here happened when this new news came out. So this is sort of the short end reason why we can see the price of bitcoin pumping up so much.

But there’s other underlying reasons behind bitcoin’s price. I want to break this down. We’re going to look at the fundamentals, we’re going to look at the macro picture, but I also want to look at the cycles. So if you’ve been around in bitcoin, you already know this. If you’re new, maybe you don’t understand this. Again, remember, price is always the equilibrium of supply and demand. We’ve already gone through this since the supply is so constrained, if a little bit of demand goes up, the market moves very fast, right? But what happens with bitcoin is that about every four years the supply gets cut in half.

And what do I mean by that? So we know, unlike the fed, unlike the fiat currency that we have with bitcoin, we always know what the supply will going to be. So we can see this green line right here is the supply curve going out, and right here is the actual supply. So every four years, the new supply gets cut in half and the supply continues going up, but at slower and slower pace, so we can see this.

So what happens? Again, supply and demand. If you restrict the supply, but the demand stays the same, the price goes up. If you restrict the supply and the demand goes up, the price goes up even more. And that’s exactly what we’re seeing here’s, sort of a chart showing these cycles with the price. Now, what you can see is the price moves up. We have this having cycle that happens, the price goes up, and then it sort of finds this new equilibrium.

The having cycle happens, it goes up, it kind of comes down, it finds this new equilibrium, having cycle happens, the price goes up and then it sort of comes down. Now, if you were a third grader and I showed you this chart and I said, this is the having cycle here’s, what happened to the price? Consolidation, having cycle, price goes up, consolidation, having cycle, price goes up, consolidation.

And now we have another having cycle here. What would you say would happen? Well, if you’re any very good at pattern recognition, you would say the price would probably go up. And as a matter of fact, that’s exactly what we’ve been seeing. And so typically, we see the bottom of the price twelve to 18 months before the having cycle, and then we see the top of the bitcoin price 18 months after.

As a matter of fact, after the last having cycle, May of 2020, the high was November, exactly 18 months after. So it works out pretty good. Now, as we say, past performance is no guarantee of future performance. So take this for what it’s worth, but it certainly charts out that supply and demand metric. So that’s one of the reasons why the bitcoin price is pumping. Now, if this supply demand metric, this having cycle, continues moving forward, then we would expect the price of bitcoin to continue going much, much higher.

How high? Well, let’s take a look. Where do we go from here? So a lot of people want to know, should we be buying bitcoin right now? Where do we go from here? Well, there’s a couple of things we can look at. So this is kind of back to the chart on here. We have a couple of lines. This big red line right here is this 200 moving day average.

We have the 50 day moving average and we have the 100 moving day average. Now, I don’t put a whole lot of into reading this technical analysis, but there is something worth seeing. So what we can see here is that when the price of bitcoin pumps really hard like this, it typically comes back down and retests. So right here was a retest, and you could have bought and so here after it pumps, it’s most likely going to come back down and retest.

However, these lines can also go up. So if you want, you could wait for it to come back down and retest this line. However, potentially, just like we saw here on the retest, it was actually higher than it was right there. So it will most likely come back down and retest it, but it doesn’t mean the price will be lower than it is right now. Now that’s from a technical analysis standpoint.

What other metrics should we be looking at? Well, we also want to look at the global macro picture. The reason why is that the global macro picture really is in charge right here. So if we have this liquidity supply shock and stock markets drop 50%, the bond market seizes up, bitcoin is probably going to crash as well. So that could happen. So this right here is the move index.

So this is showing us the volatility in the treasury market in the bond index. And what we can see is we are approaching the red zone. This is where problems really happen. So we have this overhanging the whole system potentially danger that we have. But there’s another chart that I really think that is very important. And what this is, is this is the price of gold and mapping real rates.

Now what you can see going back to 2008, real rates and gold move in lockstep together. But right here something changed. Why is the price of gold continuing to new all time highs while we see the real rates dropping down? And this divergence is something that is worth noting. And what this is telling us is that people are realizing that there’s massive risk in fiat currency, there’s massive risk in the bond market and the treasury market, and they would rather have gold.

They would also rather have real estate and stocks, which is why they’re not dropping. And they would also rather have Bitcoin, which is why the price is going up. And so this chart is very telling. It’s something we should be paying attention to when we’re looking at the global macro picture. Now the other thing we want to look at is again, the supply demand metrics. So again, if the demand goes up and the supply stays constrained or it goes down, the price goes up.

And so with these ETFs, what we can see is that the potential approval for this BlackRock ETF is extremely high. This surge. This is from Larry Fink. So Larry Fink is the head of BlackRock, the largest asset manager in the world. And I can already hear the eye rolls going on. Go ahead and just drop the comments. Mark’s talking about Bitcoin again, right, this stupid internet money, right? But Larry Fink, the largest asset manager in the world, is saying now unless you’re more successful and richer or smarter than Larry Fink, you should probably pay attention so what did he say? He said that he, Larry Fink, attributed the surge in price to the pent up interest in cryptocurrency, stating, quote, we are hearing from clients around the world about the need for it.

Larry Fink suggests that the rally could be driven by a flight to quality. Wait, what? Larry Fink said this? He suggested the rally could be driven by a flight to quality among ongoing global geopolitical tensions. If you didn’t know, we have massive geopolitical tensions going on. And he said, quote, cryptocurrencies are a safe haven. Whoa. Mind blown. I know. Go ahead, fill up my comments. Larry Fink doesn’t know what he’s talking about.

Right. The largest asset manager in the world, the quasi arm of the Federal Reserve. He doesn’t know, but I’m paying attention. You should, too. Okay. What else do we have to look at again? The supply and demand metrics. So what we can see is we only had about $40 million move into these ETF markets based off of this move. This $40 million, $43 million of inflows moved the market up over 10%.

So what does this mean? You have to realize that when the market cap moves up, that doesn’t mean money moved in. Right. So if the market cap goes up by $200 billion, doesn’t mean $200 billion moved in. What it means is that the valuation is higher because of that money moving in. So what we’re seeing is about a 200 to one ratio. So for every $1 that goes in, it moves up $200 in market cap.

That’s what we’re seeing here. So what does this tell us? Well, most people are estimating that if these ETFs, or I should say when these ETFs get approved, we’ll see about 300 million at least, move into these ETFs right away. Potentially a few hundred billion. So if we put a 200 to one ratio on that, where does that put the market cap? I don’t even want to say the price, because it will be so sky high, it’s going to look insane.

But I’ll let you kind of do the math here’s a little bit better here. We see. When the ETFs are approved, these vehicles could see a minimum of 14 billion of inflows. Whoa. 14 billion of inflows in year one, ramping to 38 billion inflows in year three. The price of bitcoin could see a 75% appreciation from that. Now, this isn’t investment advice. Take it on your own to do what you want.

But let me give you an option. What should you do? Right. I told you I was going to answer that question for you. What should you do? Should you buy now or wait? Well, as we showed you from the technical analysis chart, most likely it’s going to pull back. However, at the pullback, it could still be higher than it is today. We don’t know the answer to that.

Could the market crash? Could we see a massive liquidity shock could we see stocks in the bond market seize up? Sure. If that happens, the price drops down. How low? Probably at this last support, 1516 $17,000. What’s the probability of that happening? Do you say that’s a 50% chance that’s happening? 80% chance, a 10% chance. So then, depending on what you think the probability of that happening, if you think it’s a 50% chance of a pullback, then you might want to put your 50% of your bitcoin allocation in today.

That’s a lump sum. And then you save the other 50% to average in later if the price goes down. One of the best strategies called dollar cost averaging. This works for any type of asset, and it means you average in over time. Now, there’s a calculator here that I’ve used that I want to show you. So this goes back here to the last having May of 2020. This is the last time bitcoin halved.

Now, this assumes that you are putting $100 in every single week. So every week, $100, you just average in. All right? And what this shows you is this grade line is the price, the valuation, or the amount of money you’re putting in? $100 a week. So it’s going up, up. What we can see is the valuation of that went way higher, way higher. And here you were underwater.

You were underwater a little bit, but today you’re way back above, you would have invested 17,900. It would be worth $21,000 today. So if you’re afraid to put it in because I don’t know, what if the price goes down? Then you could start dollar cost averaging or depending on what your probability index is of another crash happening, put in a percentage based off of that. But let me know what you think about that.

Leave me a comment down below. Are you a dollar cost averager, or do you think Larry Finks, out of his mind, doesn’t know what he’s talking about, and it’s all a big scam? Let me know in the comments down below. Give a thumbs up if you like the video. If you don’t, you can give me a thumbs down. That’s okay. But at least tell me why. In the comments down below, subscribe, if you’re not already subscribed.

And that’s what I got. To your success. I’m out. .