Since the Bitcoin ETFs launched 2 months ago most of the price action seems to take place during weekdays. During weekends volatility is generally very different than during the week. That means that almost all of the price action in Bitcoin at the moment is caused by the ETF. I was thinking about this while having a coffee in my garden yesterday and then had realised that because all the volumes in the Bitcoin ETFs are public, you can model where the price will go using a Bitcoin ETF multiplier.

It’s of course a purely mathematical exercise, but it is useful because it shows the effect the ETFs will have on future prices. This model is only valid as long as the ETFs are the main price driver (or unless all other flows turn out to be highly correlated to the Bitcoin ETF, which is possible), but for the near future that seems to be the case. I would not dare to make long term predictions using this multiplier, but I think you can use it to predict when Bitcoin will hit $100K and what the price by year end will be.

The Bitcoin ETFs started on January 11 when the Bitcoin price was about $46,000. Today the Bitcoin price hovers around its all time high of about $70,000. That means the price went up by about $24,000. During this time there was a net inflow of about $9.5B into the Bitcoin ETFs. The Bitcoin market cap went up from $884 billon on the day before the ETFs launched to $1342 billion on Friday when the market closed, so an increase of $458B caused by an inflow of $9.5B, which results in a Bitcoin ETF multiplier of about 48.2.

This we can use to calculate when Bitcoin could hit $100K, because we know that at that price the market cap will be about $1990B. So in order to get to $100K the market cap will have to increase by $648B. With a multiplier of 48.2 that means $13.4B will have to flow into the ETF. The ETFs on average had a net inflow of $240M per day, meaning we will need about 55 trading days to get to $100K. That’s 11 weeks from today, so at current ETF net inflows I expect this to happen by mid- to late May. 

Of course this assumes ETF inflows stay stable, which is a conservative assumption. I expect inflows to go up once the Bitcoin price will be over the $70K hurdle, because of the hype that will start. At the same time I expect the outflows of the GBTC ETF to go down, meaning the net inflows will likely go up even more. Over the past 2 weeks the net ETF inflows were on average much higher than the 2 month average of $240M, meaning that if this continues we could actually reach $100K a earlier already. You just have to keep following the net inflows to get a feeling for this. Next to that we will have the Bitcoin halving coming up in just over a month, in which the Bitcoin supply will go down by 50%, making Bitcoin’s inflation lower than that of Gold. Lower supply means the multiplier should go up. Finally, very soon financial advisors can start selling the Bitcoin ETF to their clients, that could lead to another large pool of inflows that people are not expecting yet. 

So where will the Bitcoin price be at the end of the year? There are 205 trading days left on Wall Street in 2024 according to ChatGPT. The average inflow per trading day was $240 million, so ceteris paribus we will have total new inflows of roughly $50 billion until the end of the year. That means the market cap will increase by about $2470B by the end of the year, which implies a price increase of about $124,000. The current Bitcoin price is about $70,000, so this model leads to an expected Bitcoin price of $194,000 by the end of the year. 

A year-end number of around $200,000 is in line with my current expectations. The ETF has been much more successful than almost anyone had imagined, so a few weeks ago I increased the number I have in mind for the end of the year, but I had no data to back it up. I believe that once a hype starts the multiplier could increase: during a hype phase more people will want to buy Bitcoin, while less people would be willing to sell. However, the $100K could turn out to be a big psychological hurdle. Many people who don’t fully understand what drives the Bitcoin price (that’s probably most people who own Bitcoin…) may want to take some profit, so a lot of new inflows may be needed to offset that.

By the way, the $200K number will not be the top of this cycle, right now I think that will likely be a few months later around $250K. But a supercycle is also a (still very small) probability, in that case Bitcoin will keep on going up without any major bear markets like we had in the past.

This model is obviously a bit too simple for exact price predictions, but its simplicity makes it useful to see where markets are heading over the next couple of months. Just follow the Bitcoin ETF in- and outflows to get a better feel for the market. If big external events should take place that change the structure of the market, for example large corporates or nation states announcing that they start to invest in Bitcoin, this model won’t be useful anymore.

Nobody can predict the price, but for me this model is an interesting mental exercise. And whatever happens, there will be amazing times ahead this year for Bitcoin!