Building on CryptoSlate’s recent analysis of the competing Bitcoin inflows and outflows between BlackRock and Grayscale, I extrapolated the data even further to see just how long BlackRock could sustain its current average Bitcoin accumulation.Currently, 900 new Bitcoins are mined daily, and this will drop to 450 BTC around April 18, 2024. Additionally, as I said previously, BlackRock is acquiring around 6,266 BTC daily. If BlackRock were to attempt to buy directly from miners, this would lead to a net deficit of 5,266 BTC.
So, it needs to get Bitcoin from somewhere else. So far, the Coinbase OTC desks have had sufficient liquidity to soak up the requirement. However, this cannot last forever; there is no endless liquidity. The table below shows what would happen if BlackRock bought from each cohort with miner participation.
BlackRock Bitcoin inflow rate
At its current rate, over the next 10 days, BlackRock would achieve around 81,481 BTC with little to no significant impact on any cohort. So, the launch is a failure?
I don’t think so.
If we extend this down to Sept. 6, 2024, and BlackRock is only buying from the liquid supply, with miners adding to this cohort and reducing the impact, the entire cohort would be absorbed.
BlackRock acquisition day 233
Let’s carry on.
To keep it nice and clear, each table going forward will be under the following hypothetical scenario.
What if BlackRock bought exclusively from this cohort at the rate it has during the first four days and newly mined Bitcoin was also included, thus reducing the impact of BlackRock’s buying?
By March 3, 2025, the Bitcoin held on exchanges would be gone, and BlackRock would have 2.6 million BTC.
Exchange balance absorbed.
The ‘very liquid’ cohort would be absorbed by June 6, 2025. This group is probably the most easily accessible for BlackRock to find liquidity, and it is still just 18 months away.
Very liquid supply absorbed.
In just eight years, by 2032, BlackRock’s Bitcoin holding would be worth $686 billion by today’s standards and consist of 16,404,391 BTC. This would require it to have found a way to buy all of the Bitcoin from the ‘illiquid’ supply and give it around 79% of all Bitcoin in circulation under management.
Illiquid supply absorbed
Finally, in just 3,073 short days, on June 16, 2032, BlackRock would have bought all of the Bitcoin in circulation and finally have to stop its 6,266 BTC per day purchase. Going forward, there would only be 113 BTC available each day from newly mined Bitcoin, of which there would be 327,538 BTC left to mine.
BlackRock owns Bitcoin
Of course, few of the above scenarios are going to happen. BlackRock is unlikely to be able to sustain these levels of inflows in Bitcoin terms without Bitcoin’s price either falling significantly or demand increasing along with price.
Hypothetical Bitcoin supply absorbed by BlackRock
For example, 6,266 BTC is worth $262 million at $41,840 per Bitcoin. At $200,000, this amount becomes $1.25 billion daily. Conversely, at $10,000, it is only $62.6 million.
So unless Bitcoin stays around $40,000 for the next eight years, BlackRock is able to convince investors to buy its ETF at the same pace, and it can find HODLers willing to sell, we aren’t going to see BlackRock take custody of all the Bitcoin.
However, we can now start to see what sort of an impact consistent Bitcoin ETF inflows can have on different parts of the supply. Personally, my Bitcoin is illiquid and remains that way. I see the benefits of spot Bitcoin ETFs, and I also see the supply crunch that’s coming in some shape or form. Definitely not today, probably not this quarter, but after that…
CryptoSlate will continue to dig into the numbers and nerd out on chain for you, so if you enjoyed this exploration into Bitcoin supply, please let us know on our X account @cryptoslate or reach out to me directly @akibablade.
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Author: Liam ‘Akiba’ Wright