Bitcoin Breakout

After the slight drawback we experienced last week due to the news of Mt. Gox moving Bitcoin, the market has rebounded impressively. Bitcoin has risen by 4% this week, regaining the 70k mark and showing strong potential to surpass previous highs in the near term. Following this bullish surge, we believe reaching the 80k mark is within reach soon. Additionally, a recent statement from the head of digital asset strategist at Fidelity, the third-largest asset manager in the world with $3.9 trillion in assets under management, suggests that most investors should consider including some Bitcoin in their portfolios, regardless of their overall thesis on the cryptocurrency. This is extremely bullish, as Fidelity is advising investors not to overlook Bitcoin. They believe investors shouldn't be sidelined from such a high-performing asset.

Bitcoin Weekly Price Chart

Following this bullish move up, the crypto fear and greed index for Bitcoin has risen back into extreme greed sentiment. This usually marks the start of a more explosive move as investors look to ride the bullish momentum. We have noticed more interest this week in the digital asset class and many investors are also predicting Bitcoin to attempt to break all time highs, hence the extreme greed sentiment in the market.

Bitcoin Fear and Greed

Furthermore, this week it was reported that Bitfarm, a top 10 Bitcoin mining company, experienced a 42% decline in crypto mining revenue in May. This marks a 45% drop to $7 million in the first full month following the Bitcoin halving. This drop in revenue only supports the rise in Bitcoin's price. As mining becomes less profitable, mining companies are less likely to sell their Bitcoin on the market. This results in a lower supply on exchanges with continued high demand, meaning Bitcoin's price would likely rise.

Bitcoin Miners Revenue Per Day

Ethereum

Ethereum price has been holding quite steadily while we await the launch of ETH ETFs. Ethereum is up 0.5% week to date.An analysts from VanEck, one of the leading investment management firm, has predicted that Ethereum price will hit $22,000 by 2030. This is approximately 5.7x (469.95% increase) from the  current price. We believe this prediction is very achievable by 2030, especially once ETH ETFs are live and if crypto adoption goes mainstream. Ethereum is likely to remain the main blockchain for interactions with decentralised applications and its financial system, and with its deflationary supply in high network activity conditions, this provides a favourable supply shock that will result in higher prices.

Ethereum Weekly Price Chart

U.S. Bitcoin ETFs

Bitcoin has continued its positive net flow streak for another week, driven by strong interest in Spot ETFs. Notably, Franklin Templeton's CEO remarked that Bitcoin investment is still in its early phase, predicting another wave of Bitcoin ETF adoption. This sentiment is reflected in recent market activity, with Bitcoin ETFs experiencing its second largest net flow day, attracting $886.6 million in inflows. BlackRock's IBIT has crossed $20 billion in assets under management (AUM), with its Bitcoin ETFs accounting for 26% of BlackRock's 2024 inflows and an impressive 56% of Fidelity’s. Adding to the momentum, Australia's first spot Bitcoin ETF with direct BTC holdings went live on Tuesday.

Bitcoin ETF Flow Table (US$m)

Linea Halts Transactions

The Ethereum layer-2 network, Linea, froze all transactions after an exploit drained $2.3 million worth of ETH from a decentralised exchange operating on the network. Linea's actions have raised concerns about decentralisation in layer-2 networks. Users argued that the network violated the principle of decentralisation by halting transactions, highlighting a potential vulnerability in the governance of Layer-2s. It is understandable that transactions on Linea were halted to limit any further exploit as a "last resort" action, however we too believe that as a decentralised network going forward, this should not happen. Whilst the network is still in its infancy, we believe its just a stepping stone that will bring them back up to pace with other Layer 2 ecosystems.

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