BlackRock Buys Over 13 Days of Bitcoin Production: A Sign of Supply Shortage?

Hongji Feng
Last updated: | 2 min read
BlackRock Bitcoin
Source: DALL·E

In its recent entry into the spot Bitcoin exchange-traded fund (ETF) market, BlackRock has purchased over 11,400 Bitcoins, prompting speculation of supply issues.

According to InvestAnswers, BlackRock bought 11,439 Bitcoins following the official launch of their spot Bitcoin ETF. This amount equates to over 13 days of Bitcoin production, considering the average daily issuance of around 900 Bitcoins.

Massive Purchase Raises Supply Concerns

“The key point is 11,500 BTC were sucked from the system in 2 days by 1 player,” said InvestAnswers. “That alone is approximately 13 days of supply.”

As BlackRock swallowed Bitcoin reserve with shocking speed, the biggest asset manager raised supply shortage concerns.

“IBIT Spot ETF only managed an average of 25% of the volume over two days – so we can assume 46K in 2 days was sucked out,” said InvestAnswers. “Net net, if this pace continues, we’re facing a severe supply crunch.”

“Assuming 11,500 x 4 = 46,000 or 23,000 per day, that’s 25.56 times the daily production consumed by US ETFs per day alone,” InvestAnswers shared the calculation.

The first-day exchange data indicated the Grayscale topped the trading volume ranking. However, according to Bloomberg Intelligence ETF analyst James Seyffart, it was a “very easy argument to be made that a ton of this volume was selling of GBTC and buying of other ETFs for now.”

The statistics showed that BlackRock’s iShares Bitcoin Trust was ranked the second with over $1 billion trading volume.

BlackRock Releases New Bitcoin ETF Ads

In the meantime, BlackRock has released a new spot Bitcoin ETF advertisement. The ads seems to target a broader audience besides the crypto enthusiasts, aiming to promote their Bitcoin ETF to more investors in the U.S.

“BlackRock’s Bitcoin pitch coming to cable tv news, antiques roadshow episodes and the weather channel near you,” said Seyffart.

The established financial institutions like BlackRock and Fidelity endeavor to publicize the crypto products to the investors who would not have considered Bitcoin, while the market anticipates massive inflows brought by Bitcoin ETFs.

“This is how you market to rich boomers, folks. The calm disposition, easy to understand inv case, soft new age music, suit with no tie,” said Bloomberg analyst Eric Balchunas. “Everything about it says ‘it’s ok now, the adults are here’.”