Bitcoin Equilibrium Price Likely to Top $168,000 Following ETF Approval, FSInsight Says

Demand for ProShares’ bitcoin futures ETF is likely to exceed $50 billion in the first year.

Oct 19, 2021 at 11:10 a.m. UTC
Updated Oct 19, 2021 at 7:10 p.m. UTC

Will Canny is CoinDesk's finance reporter.

Bitcoin will extend gains following the approval of the first bitcoin futures exchange-traded fund (ETF) in the U.S., according to Tom Lee, head of research at FSInsight, a markets strategy and research firm, in a note.

The 10 largest ETF launches witnessed inflows of $14 billion in their first year, on average. The most successful was the Nasdaq 100 ETF (NASDAQ: QQQ) in 1999, with inflows of $36 billion. FSInsight expects demand for ProShares’ Bitcoin Strategy ETF to surpass that of QQQ and forecasts inflows of more than $50 billion.

The new ETF, which starts trading on the New York Stock Exchange today, will also allow many more investors to allocate to crypto. This will result in significant new inflows, which will result in price gains, FSInsight says.

FSInsight estimates that bitcoin daily demand will increase by $50 million due to ETF inflows. If the block reward is $10 million per day, the “equilibrium price to clear this, based on analysis by our data science team = $168,000.”

This equilibrium price, which is the value at which demand for bitcoin meets supply, is above FSInsight’s bitcoin year-end target of $100,000. Bitcoin was trading at about $62,260 as of publication time.

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Will Canny is CoinDesk's finance reporter.

Will Canny is CoinDesk's finance reporter.

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