A week after the launch of the new Bitcoin ETFs, I examined their potential impact on Bitcoin's supply dynamics in an article titled "If BlackRock continues 6k BTC daily buys, we get a supply crunch within 18 months; here’s why." On the publication day, January 18, Bitcoin closed at $41,248, dropping from a peak of $49,000 on January 11. Since then, the leading digital asset has surged by 37%, surpassing $57,000.

Despite Bitcoin's consistent decline post-ETF launch, CryptoSlate highlighted ongoing BTC inflows, averaging about 6,266 BTC daily for BlackRock alone at the time. The analysis suggested that if such inflows persist, the liquid Bitcoin supply could be exhausted this year, potentially targeting exchange balances or very liquid supplies by mid-2025.

It's worth noting that this analysis was purely hypothetical, overlooking outflows from Grayscale GBTC and focusing solely on BlackRock's largest fund inflows for simplicity. The aim was to underscore the possibility of a supply squeeze and the scarcity of liquid Bitcoin to accommodate sustained ETF pressure. On January 18, BlackRock managed 25,067 BTC, valued at $1 billion.

Interestingly, while BlackRock's inflows didn't maintain the 6,266 BTC daily average pressure, inflows into the Newborn Nine exceeded this level. Currently, BlackRock manages 130,231 BTC, whereas the fund would hold 275,707 BTC if the 6,266 BTC daily trend continued. However, on January 18, 6,266 BTC was valued at $258 million, now representing an inflow of $357 million due to the significant price surge.

It's crucial to understand that spot Bitcoin ETFs are bought with dollars and denominated in dollars in a brokerage account. Thus, while ETF inflows have been consistent in dollar terms, they've reduced in terms of Bitcoin purchases.

As per K33 Research, the Newborn Nine now holds 303,002 BTC. Projected inflows for BlackRock by March 2, 2024, align with the CryptoSlate table used for the January 18 article.

With this data, if the Newborn Nine continues to absorb Grayscale's decreasing outflows and acquire additional Bitcoin from the broader market at this pace, 1 million BTC could be under management by June. Moreover, this rate could absorb the BTC equivalent of the current entire liquid Bitcoin supply (roughly 1.3 million BTC) by September.

On February 8, I discussed the potential for the 'Mother of all Supply Squeezes' for Bitcoin, akin to the GameStop saga but more potent. Since that article, the price surged 29% in just 19 days, averaging 0.65% per day. Bitcoin ETFs continued buying, and Grayscale's outflows slowed down.

The prerequisites for a supply squeeze seem evident; the only question remains: at what point does demand start being influenced by the price? Would Bitcoin ETF buyers persist if Bitcoin hits $100,000? At that price, BlackRock's IBIT would be around $60 per share, which might not sound too expensive to new investors.