Blockchain expert Samson Mow has recently shared his prediction about Bitcoin. Writing on social media, he proposed a potential price surge to $1 million in days to weeks, with the starting point yet to be determined.
This forecast is based on a potential supply shortage due to rising demand from recently approved Bitcoin Exchange-Traded Funds (ETFs), which have already seen billions in trading volume.
Notably, BlackRock's acquisition of 11,500 BTC has significantly diminished the available market supply within the initial two days of trading, equivalent to purchasing 13 days' worth of the current daily Bitcoin supply of approximately 900 BTC.
This rapid depletion of available coins could set the stage for a surge in BTC demand, particularly if ETFs continue to attract substantial inflows. According to CryptoSlate's analysis, if institutional buying persists at the current aggressive rate, the supply could dry up in around 120 days, creating unprecedented scarcity in the cryptocurrency's history.
Adding to the complexity of market dynamics is the impending Bitcoin Halving, an event historically influencing prices by reducing the rate at which new Bitcoins are created. Anticipated within the next 90 to 120 days, this imminent halving will lead to a reduction in the mining reward, specifically lowering it from 6.25 BTC to 3.125 BTC.
Here’s why we’re going to $1M #Bitcoin in DAYS to WEEKS: it’s MAX PAIN pain for the most people.
— Samson Mow (@Excellion) January 9, 2024
Bitcoin has a way of doing what we least expect & in the most disruptive way. For example, at JAN3 we have many plans & meetings set for 2024. $1M BTC would derail everything.
🧵👇
Max Pain Theory in Bitcoin
While the combination of surging demand and diminishing supply, exacerbated by the approaching halving, could lead to an unparalleled price surge, Mow used the Max Pain Theory from traditional financial markets in his forecast.
While this theory lacks a formal definition within the crypto sector, it traditionally signifies the price level at which a majority of options contracts expire as worthless, resulting in substantial losses for holders.
In the context of Bitcoin, this theory could manifest as swift and extreme price fluctuations. One of its key aspects is the potential for a short squeeze in the coming days, where an unexpected surge in Bitcoin's price forces short sellers to buy back at higher prices to limit their losses.
Such a scenario, Mow argues, could contribute to the rapid ascent of Bitcoin price, potentially catching traders and investors off guard and amplifying the cryptocurrency's inherent volatility.
The Max Pain Theory aligns with Bitcoin's historical tendency to defy conventional market expectations. Mow's projections include potential disruptions to strategic plans for nation-states and companies investing in Bitcoin, affecting the usability of the Lightning Network due to high fees, and challenging established models like the Stock-to-Flow (S2F) used for predicting Bitcoin's value.
Potential consequences
Adding to the forecast, Mow has outlined several potential consequences that could unfold if Bitcoin were to reach the $1 million price point soon. Among the scenarios Mow anticipates is the possibility of El Salvador missing a crucial opportunity to issue Bitcoin bonds.
In addition, he speculates that major economists, including figures like Christine Lagarde and Jerome Powell, might face professional consequences for failing to foresee the inevitable “hyperbitcoinization” accompanying such a rapid price increase. Mow suggests that Michael Saylor and MicroStrategy could fall short of their goal to obtain on percent of the Bitcoin supply in this accelerated scenario.
However, Mow's predictions extend beyond individual entities to highlight broader impacts on the legacy financial system. He argues that the current state of the traditional financial system is unprepared for a rapid reorganization around Bitcoin, signifying potential disruptions and challenges.
In response to these unfolding market dynamics, Mow offers strategic advice to investors to concentrate on the raw demand for Bitcoin, advising investors to look beyond short-term inefficiencies. Mow underscores the inadequacy of the existing Bitcoin supply to meet the growing demand and stresses the importance of strategic planning for those considering entry into or expansion within the cryptocurrency market.