Can you predict Bitcoin's market cap based on the ETFs inflows?

Bitcoins ETFs report, March 2024

Bitcoin is already back to its all-time high. That's in no small part due to the ETFs. You could even say that for Bitcoin the ETFs are the only game in town at the moment.

But can we put a number on the effect of the ETFs? 

I have received countless versions of the same question. It goes something like that: can we estimate what is the impact of the ETFs inflows on Bitcoin's market cap?

Lets see if we can answer this question.

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Can you predict Bitcoin's market cap based on the ETFs inflows?

Note: to get a complete data set I stopped this analysis at March 04, more inflows came after that but that won’t change our analysis in a meaningful way.

The takeaway

Based on the data we have so far we can say that roughly for every $1 billion of net inflows coming from the Bitcoin ETFs, Bitcoin’s market cap grows by $50 billion (or $2.4k added to Bitcoin’s price). 

The problem is that there is a lot of uncertainty on that number. The error bar is as big as the number itself.

So while it looks like there is some quantitative information to be extracted from the relation between the ETFs inflows and Bitcoin’s growth we just don’t have enough data yet.

Best we can do is come up with some qualitative rules while waiting for more info.

That doesn’t mean you should wait before investing though. There are times when it is just enough to know the direction of the bet even if you are not sure of how far it will go.

Average Bitcoins captured per day