US Bitcoin ETFs Stacking Accelerates and Price Moves Higher to Accommodate

Hi everyone, welcome back to our Bitcoin Monthly. We hope you all enjoyed an extra long February. We know US Bitcoin ETF investors were happy to have an extra day to buy even more Bitcoin! Flows into these funds accelerated in the month, buying up anywhere from 10,000 to 19,000 BTC daily. This is net of continued outflows from Grayscale’s GBTC which have been more than offset by inflows into the other nine. Blackrock’s IBIT maintains its leadership position posting growth to over USD $10 billion in only seven weeks. If this isn’t a record, it’s certainly close and the punchline is that inflows are accelerating. Rarely have we witnessed momentum this strong in the early days of new ETFs, and it’s especially remarkable in aggregate. The marketing power of some of the world’s largest asset managers is on full display, and with Bitcoin’s price moving strongly higher through February, everyone is paying attention.  

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Source: Bloomberg

As we mentioned last month, you must do a little math to put these flows in context because converting USD flows to Bitcoin purchases naturally changes daily with the Bitcoin price. In US dollar terms, Bitcoin posted its biggest monthly candle ever last month, and remember even on a leap year February is the shortest month. Price moved in a range of USD $22,108, with the real body (open to close) being USD $18,972.  

Another fun Leap Year fact: you could buy Bitcoin at USD $8,000 the last time it was February 29th. This year it traded for USD $63,000. Where will it be in 2028? 

A Monthly God Candle – More To Come?

Source: Bloomberg

How investors react to this chart could separate the winners from the losers for the rest of the year. We expect traditionally minded traders to be selling above USD $60,000 as price moves toward all-time-highs. They will expect a retracement of the magnificent year-to-date rally of +45% in only two months. And this trade might work for the short term, but we expect US ETF demand to combine with the April Halving to tilt the odds in favour of much higher prices for the rest of the year, because 80% of the free float today is in the hands of Bitcoiners who have not sold in over a year. We simply don’t believe that many of them were waiting for these levels to sell since we know they’ve held through a deep bear market. The commitment of the diamond hands should not be underestimated, and their price targets are nowhere in sight. 

Being infinitely divisible, Bitcoin’s price exhibits exponential moves as the only way to accommodate new demand in Fiat terms. The current block reward of 6.25 Bitcoin every 10 minutes gives it roughly an inflation rate of 1.6% which compares favourably to gold’s 2.25%, but this will be cut in half at the April Halving to 0.8%. We’ve never seen an asset with a diminishing supply schedule like Bitcoin and while there will be much said about the Halving (including from us in upcoming issues of this newsletter!). The best way to think about Bitcoin supply is that it is already effectively fixed because the incremental increase is already very small, and getting smaller every four years.  

To repeat the point: increasing demand does not increase Bitcoin’s supply, it can only increase Bitcoin’s price. Did we already mention that huge new demand came online seven weeks ago with US Bitcoin ETFs? 

This is why those who are paying attention continue to be bullish despite the 45% rally year-to-date. It’s also why we think very few people are bullish enough because, frankly, humans are not great at thinking in exponential terms. We are good at pattern matching which is why we expect the media to make a big fuss about Bitcoin recovering it’s 2021 all time high despite it being an entirely irrelevant number in the grand scheme of how pricing will play out in light of new sources of demand and the Halving of the block reward. 

Speaking of all-time-highs, in CAD terms we saw new highs on February 27th, and in fact new highs have been made in more currencies than not.  

A Loonie Doesn’t Buy As Much Bitcoin As It Used To

Source: Bloomberg

As you know, we tend to think of Bitcoin in US dollar terms because that’s the biggest market and most widely quoted cross, but it does distort the perspective slightly because compared to other currencies the US dollar has strengthened by 8.31% since Bitcoin’s previous all-time-high. 

US Dollars: Second Best Is Still Better Than All The Rest

Source: Bloomberg

As we look ahead to new highs, it’s worth taking a moment to consider what you plan to do and how you might feel if we have a period of both higher prices and higher volatility. As mentioned, February’s range was roughly USD $22,000 which is more than the entire price in the second half of 2022, not long ago. So put yourselves in the shoes of someone who bought below $22,000 back then (congratulations if that was you!): that investor saw a swing of more than 100% of their purchase price last month. How will you react if that happens to you? To gain the benefit of exponential price discovery, with periods of heightened volatility you have to accept that this asset can move more than anything else in your portfolio. If history is any guide, a Bitcoin bull cycle can have rallies of over 100% and drawdowns of around 30% while still maintaining upward momentum. We’ve often said we like this behaviour because it compresses the bull/bear cycle into 4 years whereas other assets trace the same pattern over 10 to 20. We’re all short on time so we’ll take a shortened cycle with higher volatility and size our positions accordingly. 

With a strong February in the books, we look ahead with excitement to the year ahead. Best of luck to you and we welcome any feedback on this month’s edition of our newsletter. 

Evolve’s Bitcoin ETF (EBIT ETF) is one of Canada’s first bitcoin ETFs and provides investors with a simple and efficient way to access the price of physical Bitcoin through a secure investment solution. For more information on this fund, visit

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