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Cathie Wood’s Forecast for Bitcoin Indicates a Supply Squeeze: Will It Exceed $1 Million?

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The most popular cryptocurrency in the world, Bitcoin, has long been the target of audacious forecasts on its potential worth. Still, very few predictions are as reliable as Cathie Wood’s. Wood has made a name for herself in the financial industry as the CEO of Ark Invest, and her recent forecasts about the price of Bitcoin have generated a lot of discussion and attention.

According to Wood, the price of Bitcoin by 2030 may reach an astounding $600,000, which would be an almost tenfold rise from its current value. Her optimistic prediction that Bitcoin would reach $1.5 million by the end of the decade is even more startling. These enormous sums would enable the market capitalization of Bitcoin to reach previously unheard-of levels—more than $30 trillion.

Wood’s initial goal for her bull lawsuit was $1 million. She did, however, raise her estimate in light of recent events, such as the adoption of Bitcoin spot ETFs. She lists a variety of reasons for this adjustment, including the rise in institutional and long-term investors, the number of Bitcoin holders, the rise in hash rates, and the entry of exchange-traded funds (ETFs) into the market.

One such ETF has gained popularity fast after being introduced in tandem by ARK and 21Shares (ARKB). In less than two months, ARKB has accumulated almost $2 billion in net assets, ranking third among active spot ETFs in terms of cost ratio. Its success is demonstrated by the significant inflows it has drawn, which have caused its value to rise by an astounding 60% in the last month.

The ownership of Bitcoin has changed dramatically due to the emergence of ETFs, which has also changed the dynamics of its supply. The emotion of regular traders had a bigger impact on the Bitcoin market, which was previously controlled by a small number of institutions. However, worry of an imminent supply squeeze has been sparked by the flood of new purchasers, especially through ETFs.

Recently, inflows into Bitcoin ETFs hit all-time highs, with about $680 million coming in in a single day. This constant flow of money results in daily purchases of Bitcoin, which progressively reduces the amount of liquidity that sellers are willing to provide. Bitcoin ETFs have had net inflows of billions of dollars since launch, demonstrating a consistent pattern of buying activity.

This tendency has important ramifications. By September 2024, ETFs may have managed all of the liquid Bitcoin supply, or about 1.3 million BTC, if the current daily purchase rate continues. Although this situation is improbable given profit-taking behavior and possible slowdowns in ETF inflows, it does highlight the increasing pressure on market liquid sellers.

The focus now shifts to the price at which traders will start liquidating their Bitcoin holdings. While some suggest that prior all-time highs, like $69,000, might serve as resistance levels, others have much higher goals in mind, like $100,000 and beyond. Wood’s bullish prediction that Bitcoin will hit $1 million implies a radical change in the dynamics of the market.

Bitcoin’s price path ultimately depends on how supply and demand interact. The availability of sellers in the market is expected to be significantly impacted by the new demand that ETFs are facilitating. Understanding when and how traders will react to Bitcoin’s further rise is crucial to predicting its future course.

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