Samson Mow believes that Bitcoin will rise to $1 million “within days or weeks” once the supply crunch occurs

Samson Mo, CEO of JAN3 and a supporter of the Bitcoin market, believes that Bitcoin will see a major supply shock in the coming days, which could cause its price to rise. The price rises to one million dollars Within days or weeks.

The outlook hinges on a perceived supply shock driven by demand from recently approved Bitcoin ETFs and a series of market adjustments currently unfolding.

Presentation shock

The launch of Bitcoin ETFs has already attracted billions of dollars in trading volume. At the same time, BlackRock’s acquisition of 11,500 BTC significantly reduced the available market supply during the first two days of trading.

The purchase is equivalent to purchasing 13 days’ worth of bitcoin supply, which currently amounts to about 900 bitcoins per day. Experts predict that demand for Bitcoin will rise significantly, especially if ETFs continue to see significant inflows.

Based on CryptoSlate’s analysis of the available supply of Bitcoin, if institutions continue to purchase Bitcoin at a similarly aggressive rate, it will only take about 120 days for the supply to dry up, making Bitcoin scarcer than ever before in its history.

Adding complexity to the market dynamics is the upcoming Bitcoin halving, an event that historically affects the price significantly by reducing the rate of new Bitcoin creation. The reward for mining new blocks will be halved to 3.125 BTC from 6.25 BTC in about 90 to 120 days.

This, combined with current demand exceeding supply, could lead to unprecedented price spikes as demand reaches new highs, while supply falls to its lowest level in history.

Maximum pain theory

Mao believes that markets are likely to followMaximum pain theory“- Adapted from traditional financial markets, it proposes a scenario in which Bitcoin price movements could lead to maximum financial loss for the largest number of market participants.

The theory, although not formally defined in the cryptocurrency space, refers to the price level at which most options contracts expire worthless, causing significant losses to their holders. In the case of Bitcoin, this can translate into rapid and extreme price fluctuations, which may surprise many traders and investors.

Mo believes that one of the key aspects of this theory in the Bitcoin market is the possibility of a short squeeze in the coming days. A short squeeze occurs when the price of Bitcoin rises unexpectedly, forcing those betting against it (short sellers) to buy back at higher prices to limit losses, causing the price to rise further.

The concept of maximum pain is also related to the unpredictability of Bitcoin price movements and market psychology. Bitcoin has a history of defying traditional market expectations, and a scenario that causes the most financial pain to the greatest number of market participants is consistent with its volatile and unpredictable nature.

According to Mao, a rapid rise to $1 million would disrupt the strategic plans of many, including nation-states and companies looking to invest in Bitcoin. It could also impact the usability of the Lightning Network due to high fees and break the stock-to-flow (S2F) model that many use to predict the value of Bitcoin.

Mow also commented on a number of additional events that could happen if Bitcoin’s price reaches $1 million too quickly, including:

Among the most significant impacts will be on the legacy financial system, which Mo believes is not ready for a rapid reorganization around Bitcoin.