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Bitcoin’s price surpassed $70,000 for the first time in over a month last weekend, reaching its highest level since April’s halving. This surge led to over $235 million in short position liquidations. The increase follows renewed investor interest in newly approved Bitcoin ETFs, which saw nearly $1 billion in investments after weeks of outflows, spurred by reports of lower-than-expected inflation. As of now, the price remains above $70,000.
Bitcoin ETFs in the U.S. recorded net inflows of $241.12 million on Monday, marking the sixth consecutive day of positive flows, the longest streak since mid-March. Over the past six days, these ETFs attracted nearly $1.2 billion. Funds managed by Ark Invest and 21Shares added $68 million, while BlackRock recorded $66 million in net inflows. Fidelity and Bitwise also saw significant inflows of $64 million and $28 million, respectively. Grayscale, which had mainly seen net outflows until recently, attracted $9 million, and WisdomTree added $5 million. Combined, the 11 Bitcoin ETFs saw net inflows of over $1.18 billion in the past six days, bringing the total since January to $12.87 billion. Despite this positive trend, overall flows remain well below their peak in March.
While we await a new peak in U.S. and Canadian dollars, Bitcoin’s price surpassed 11 million yen in Japan for the first time in history, also hitting record highs in Argentina and the Philippines. This 7% increase in a day brought the cryptocurrency closer to its U.S. dollar peak, reaching an intraday and six-week high of $71,650 on May 21, just 3.4% below its all-time high of $73,738 in March. In Japan, Bitcoin hit a high of 11.2 million yen, with the local currency weakening 10% against the dollar since January. In Argentina, grappling with 290% inflation, Bitcoin also hit record levels in Philippine pesos, briefly worth 4.18 million pesos on May 21. Other countries, including the UK, Australia, Canada, and South Korea, saw Bitcoin prices close to their mid-March peaks.
JPMorgan revised its Bitcoin production cost estimate to $45,000, up from a previous projection of $42,000. This change is due to a shift in the Bitcoin mining hashrate post-halving. Analysts, led by Nikolaos Panigirtzoglou, observed that many unprofitable miners are gradually exiting the network, though this process is taking longer than expected. In February, JPMorgan estimated the production cost of one Bitcoin at $42,000 and maintains this as a medium-term target, even though the current cost is estimated at $45,000 due to changes in hashrate and mining equipment efficiency. Panigirtzoglou noted that this estimate could still evolve with changes in hashrate and equipment efficiency, but the medium-term target remains $42,000.
The U.S. Securities and Exchange Commission (SEC) contacted major U.S. exchanges, such as the Nasdaq, Chicago Board Options Exchange (CBOE), and New York Stock Exchange (NYSE), to update existing spot Ether ETF applications. According to a Reuters report on May 21, these updates needed to be made before a regulatory deadline of May 23, when the SEC must decide whether to approve or deny VanEck’s spot Ether ETF after already delaying the process for 240 days. These update requests could indicate a potential regulatory approval. On May 20, two ETF analysts increased their approval odds for a spot Ether ETF from 25% to 75% after hearing that applicants should accelerate their 19b-4 filings. If the SEC approves VanEck’s application, it could pave the way for other spot Ether ETFs from ARK 21Shares, BlackRock, Fidelity, Hashdex, and Invesco Galaxy. Fidelity has already amended its S-1 filing to specify that the Ether tied to the investment vehicle will not be staked, suggesting such a requirement might be necessary for approval.
Genesis, the crypto lender owned by Digital Currency Group (DCG), agreed to a $2 billion settlement to partially repay customers of its bankrupt lending division. The agreement, announced by New York Attorney General Letitia James, aims to reimburse approximately 77% of the crypto funds users provided to Genesis for yield. This decision follows Genesis’s January 2023 bankruptcy, triggered by related crypto collapses, including the sudden shutdown of FTX and the crypto hedge fund Three Arrows Capital. Genesis and DCG have also been publicly battling with Gemini, a former partner, over $900 million owed to Gemini customers via its Gemini Earn lending platform. As part of the settlement, Genesis gained approval in February to sell $1.6 billion worth of shares in Grayscale products. The firm also agreed to a $21 million settlement with the SEC to settle charges, though creditors will be paid first. Gemini agreed to fully repay its Earn program customers $1.1 billion and pay a $37 million fine to the New York Attorney General.
Michael Sonnenshein, CEO of Grayscale, announced his resignation, with Peter Mintzberg appointed to replace him starting August 15, according to SEC filings. Sonnenshein, who joined the company in 2014 as an account executive and became CEO in 2021, expressed gratitude for his experience at Grayscale and for Barry Silbert’s trust. Under Sonnenshein’s leadership, Grayscale became a leader in the crypto asset sector, managing the largest Bitcoin ETF with $19.37 billion in assets. However, since the conversion of GBTC into a spot Bitcoin ETF in January, Grayscale has seen massive withdrawals, with speculation about losing its leading status to BlackRock’s iShares Bitcoin Trust. Peter Mintzberg, former global head of strategy at Goldman Sachs Asset and Wealth Management and with experience at BlackRock and OppenheimerFunds, will succeed Sonnenshein.
Optimism seems genuinely renewed in the markets over the past week. According to Geoff Kendrick, head of FX Research and Digital Assets Research at Standard Chartered Bank, Bitcoin’s price is expected to hit a new all-time high this weekend, surpassing the March 14 peak of $73,798. This forecast is supported by optimism around the potential approval of spot Ether ETFs, which would further legitimize the cryptocurrency sector and benefit Bitcoin as well. Kendrick reiterated his Bitcoin price targets, aiming for $150,000 by the end of 2024 and $200,000 by the end of 2025. He noted increased inflows into spot Bitcoin ETFs. Additionally, Kyle Rodda, senior market analyst at Capital.com, highlighted the correlation between Bitcoin’s price and the performance of the top 100 tech companies on the Nasdaq, indicating that Bitcoin remains an indicator of monetary policy expectations and risk appetite. With U.S. stock markets at their peaks, it is not surprising that Bitcoin is in similar territory.
NVIDIA’s quarterly results are due today. Good results could spark a new wave of risk appetite, historically positive for Bitcoin.
The presented information is as of May 22nd, 2024, unless otherwise indicated and is provided for information purposes only. The information comes from sources that we believe are reliable, but not guaranteed. This statement does not provide financial, legal or tax advice. Rivemont Investments are not responsible for any errors or omissions in the information or for any loss or damage suffered.
