Andrew Kang of Mechanism Capital projected significant demand flows for Bitcoin (CRYPTO: BTC) on social media on Sunday, February 11.
One of the most prevalent sins committed by cryptocurrency traders and investors is the underestimation of the global wealth, income, and liquidity and how much of it translates into cryptocurrency. We probably get tired of hearing statistics regarding the market capitalization of stocks, gold, and real estate. The more you travel and interact with other entrepreneurs, high net worth individuals, etc., the more you understand how enormously large the amount of dollar in this world is and how much of it can be converted into $BTC or cryptocurrency. Many people in the crypto space get caught up in their own little bubble.
A US household’s average income is $105,000. There are 124 million US households, which translates to a $13 trillion annual income for all US citizens. Global aggregate income is approximately $52 trillion, with the United States accounting for 25% of the GDP.
Globally, 10% of people possess cryptocurrency. It’s roughly 15% in the US and 25%–30% in the UAE. This translates to $52 billion in BTC purchases each year and $150 million purchases per day, assuming cryptocurrency users only invest 1% of their income in cryptocurrency. In reality, there is a lot of daily fluctuation in this purchase, which is dependent on seasonality factors. It is not linear. Note that, these are estimates for non-ETF/pre-ETF flow. People seem to forget that, even before these ETFs were allowed, there was a steady and enormous demand for Bitcoin. How, in your opinion, did Bitcoin go from being a trillion-dollar asset to continuously rising over the past ten years?
These figures are quite conservative for a variety of reasons. (1) You’re probably seeing more than 1% allocation. True believers contribute 50 percent or more. Maybe the typical allotment is three to five percent? (2) Allocations from enterprises, macro funds, pension funds, sovereign wealth funds, and other sources are not included here, and they are most likely of a similar amount.
And Mt. Gox? Celsius? USG Market Share? emissions from miners? This has long been the bear argument, yet the buy flows really outweigh the whole amount of sell flows when you measure them up. The sales total in the table below is around $17 billion. After this year, the non-mining emissions will likewise not be recurrent or cleaned. Investors and traders in this market tend to overstate what they can observe. See with your eyes the magnitude of the flows that aren’t disclosed to the public.
Now include the ETF inflows on top of this. The sale flows itself are only covered by the lower bound of the estimates. However, there have been a lot of days above the upper bound lately. We could easily go at $100-200 million or more per day for the next month. What the bear argument is here, really?
