This forecast is based on the demand resulting from newly approved Bitcoin ETFs and the anticipated supply contraction due to the upcoming halving event.
Samson Mow, CEO of JAN3 company and a Bitcoin proponent, argues that Bitcoin will soon experience a major supply bottleneck and, as a result, its value is likely to surge to 1 million dollars ‘in a matter of days or weeks’.
This prediction is linked to the expected supply shortage caused by the recently approved Bitcoin ETFs and the ongoing market regulations.
Bitcoin Supply Reduction
With the introduction of Bitcoin ETFs to the market, the trading volume has already reached billions of dollars. Additionally, BlackRock’s purchase of 11,500 BTC in the first two days of trading significantly reduced the market supply.
This purchase equates to 13 days of the current daily Bitcoin supply, which is around 900 BTC. Analysts predict that if ETFs continue to attract large amounts of money, BTC demand will rapidly increase.
Some analysis suggests that if institutions continue to buy BTC at this rate, the existing supply could be exhausted in approximately 120 days. This could make Bitcoin the rarest it has ever been.
An impending event like Bitcoin halving, historically has a significant impact on the price and reduces the rate of new BTC production. With this event, the mining reward will drop from 6.25 BTC to 3.125 BTC in about 90 to 120 days.
In the event that the current demand exceeds the supply, reaching new heights in demand and the lowest level in supply history could lead to an unprecedented price surge.
Bitcoin Price Theory
Mow believes that markets generally follow the “Max Pain Theory“. This theory suggests that Bitcoin‘s price movements will create a scenario that causes the most financial loss to the majority of market participants.
This unofficially defined theory in the crypto world usually refers to the price level at which the most option contracts expire worthless, causing significant losses to their holders. For Bitcoin, this could lead to sudden and severe price fluctuations that could catch many buyers and investors off guard.
Mow highlights the possibility of a short squeeze in the Bitcoin market as a significant element of this theory. A short squeeze occurs when the price of Bitcoin unexpectedly rises, forcing those betting against it (short sellers) to buy at higher prices to limit their losses, further driving up the price.
According to Mow, a rapid rise in Bitcoin‘s price to 1 million dollars could upend the strategies of many nation-states and corporations planning to invest in Bitcoin. It could also limit the usability of the Lightning Network due to high transaction fees and invalidate the Stock-to-Flow model often used to predict Bitcoin‘s value.
Other potential effects of Bitcoin‘s price reaching 1 million dollars rapidly, according to Mow, include:
- El Salvador missing the opportunity to issue Bitcoin bonds.
- Leading economists like Christine Lagarde and Jerome Powell could lose their jobs for overlooking the inevitable hyperbitcoinization.
- Michael Saylor and MicroStrategy might fail to achieve their goal of owning 1% of the total supply.
Mow suggests that one of the most significant impacts of this rapid price increase would be on the traditional financial system, which may be unprepared for a swift structural shift centered around Bitcoin.
