Bitcoins Potential Resistance

In the recent week, Bitcoins price has not moved much. It is currently down 2.1% after surpassing $70k USD after the announcement of the Ethereum spot ETF approval. In the last couple of days Bitcoin has experienced a bit off a sell off which is related to the activity of Mt Gox. Mt Gox was an exchange launched in 2010 in Japan that went bankrupt in 2014 following a hack in which hundreds of thousands of their Bitcoin were stolen. Since the hack, creditors have been waiting to be able to withdraw their holdings and on May 28th, Mt Gox moved 107,547 BTC worth nearly $7.3 billion, which is likely the beginning of distributions to these creditors. Some investors who were worried about the potential incoming sell pressure have been selling before the distributed Bitcoin, hence we saw the 2% dip.

Bitcoin Weekly Price Chart

Ethereum continues to show strength post ETF approval. Currently Ethereum is up 2.3% on the weekly and the ecosystems total value locked (TVL) is sitting at $66 billion, up over 20% in the past week.

Ethereum Weekly Price Chart

2024 Election and Government Interventions

The upcoming 2024 elections in both the U.S. hold substantial potential to reshape the landscape of cryptocurrency regulation. In the U.S., we are seeing political shifts in attitudes towards crypto.

Notably, as we discussed last week, former President Trump is now embracing cryptocurrency through accepting crypto donations, while current President Biden also appears to be softening previous strict regulatory measures in regards to the asset class. Trump has positioned himself as an advocate of the crypto industry, and continues to criticise Biden’s administration for not encouraging and facilitating crypto innovation. Since then a recent survey conclude that 33% of US voters will weigh their candidates based on their Bitcoin and crypto views. Moreover, this is an important stance for both parties as the U.S has approximately 52.9 million people that own cryptocurrencies (15.56% of the population).

Crypto Ownership by Political Affiliation & by Demographic Cohort

Why is a CBDC bad for Bitcoin?

Trump’s campaign narrative strongly advocates for the U.S. to become a leader in cryptocurrency, promoting self-custody rights and opposing the introduction of a Central Bank Digital Currency (CBDC). There are 5 key reasons we believe that the creation of a CBDC is bad for the digital asset industry.

1. No Decentralisation and Privacy
2. Bitcoin is Seen as Competition
3. Undermining Key Principles of Cryptocurrencies
4. Old Financial System Stays
5. Regulatory barriers

So far in his campaign, Trump has been very smart with his promises to the crypto industry. He knows what the people want to hear and has strategically aligned himself with the crowd. He understands that introducing a CBDC could be bad for the crypto sector and wants to reassure his followers that he supports the growth and innovation of the industry.

Trump's Pledge to Ross Ulbricht

Trump has pledged strong support for the industry, including a promise to release Ross Ulbricht, the founder of Silk Road, if re-elected. Trump stated in a recent speech that Ulbricht "has already served 11 years, we’re gonna get him home."

Silk Road was an online black market best known for its role in trading illegal goods. It was shut down in 2013, with law enforcement seizing a significant amount of Bitcoin. Ross Ulbricht, who created Silk Road, was sentenced in 2015 to two life sentences plus 40 years for various charges including conspiracy to traffic drugs. Over 117,000 Bitcoin was seized from Ulbricht and the silk road syndicate, which would have a market value of $8,190,000,000 today.

This politically driven promise was strongly supported by the crypto sector and was likely used as a marketing tool to evoke hope and happiness in individuals who believe that Ulbricht’s sentence was unjust. As people who have been heavily in touch with this industry, this too appealed to our emotions and our desire for his freedom. This is evident in the post below where we see the overwhelming support Trump is getting in regards to his promise to free Ross.

U.S. Bitcoin ETFs

Bitcoin experienced 10 straight days of positive inflows. This week Spot ETFs reached a milestone of controlling over 1 Nakamoto of Bitcoin, a symbolic reference to 1 million BTC. That is almost 5% of the total supply of bitcoin controlled by 11 ETFs. Furthermore, it is said Hong Kong is considering including an Ethereum (ETH) staking option for the spot Ethereum ETF issuers.

Bitcoin ETF Flow Table (US$m)

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