Welcome to the BTC Lighthouse report.

The last week has been historic regarding the positive regulatory actions for the crypto industry. However, inflation and interest rates have kept the Bitcoin price range-bound. Let's unpack this:

• Bitcoin ETF Net Flows At New All-Time High
• US House Approves Crypto Bill
• SEC Approves Ethereum ETFs
• FED interest rates

BTC Lighthouse Temperature

Bitcoin prices continue to be range bound at around $70k. The BTC Lighthouse temperature continues to be in the Neutral zone at 3.2.

The Bitcoin temperature moved out of the fear zone in mid-Jan. It entered the Greed zone in early April. Since the last month, it has been in the Neutral zone.

Bitcoin ETF Net Flows At New All-Time High

Bitcoin ETF inflows have restarted after a two-month pause. The net inflows touched a new all-time high of 236,000 Bitcoin worth $16 billion. The inflows are reflected in the Bitcoin price, which has traded at a higher range of around $70k for the last two weeks.

US House Approves Crypto Bill

• Historic Approval: The US House of Representatives passed the Financial Innovation and Technology for the 21st Century Act (FIT21), marking a significant milestone for the crypto industry.
• Bipartisan Support: The bill received substantial bipartisan backing, which indicates a growing consensus on the need for clear crypto regulations.
• Regulatory Clarity: FIT21 aims to establish clear regulatory guidelines for digital assets, distinguishing between securities and commodities.
• CFTC and SEC Roles: The bill delineates the responsibilities of the Commodity Futures Trading Commission (CFTC) as the regulator for crypto commodities and the Securities and Exchange Commission (SEC) for crypto securities.
• Next Steps: The bill moves to the Senate, where its future is uncertain, and the level of support remains unclear.

This approval is a pivotal step for the crypto industry, potentially transforming the regulatory landscape in the US. However, it is unlikely that the bill will pass in the Senate, and President Biden has expressed strong concerns against it. Yet, the bipartisan passage of this bill is a historic moment and shows the growing support for crypto industry regulation in the US.

SEC Approves Ethereum ETFs

• Historic Approval: On May 23, 2024, the SEC approved the first batch of spot Ethereum ETFs, another historic milestone for the cryptocurrency industry.
• Next Steps: ETF issuers must ensure their S-1 registration statements are effective before trading begins, which will likely happen in 4-8 weeks.

I do not recommend investing in Ethereum. The graph below shows Ethereum's price in Bitcoin, which is how you should look at the prices of all cryptocurrencies.

Unless you bought Ethereum at its launch and exited in the first few years, you have not outperformed Bitcoin. The price of 1 Ethereum in Bitcoin has been range-bound between 0.02 and 0.08 Bitcoin for five years.

So, you take a lot more risk but do not get higher returns, as with all other cryptocurrencies. That's why I focus only on Bitcoin.

However, approving spot Ethereum ETFs is a net positive for the crypto industry and, I guess, for Bitcoin, as it adds to regulatory clarity.

US Inflation And Interest Rates On The Radar

Unfortunately, the US inflation numbers continue to be strong. After today's Fed meeting, the market does not expect any rate cut at the next meeting. A marginal 0.9% expects a rate increase. This shows the reversal in the market's expectations. The macro-environment continues to pressure Bitcoin's price in the short term.

Summary

The good news about the crypto industry peaked last week; the ETF inflows have restarted, and the Bitcoin price is inching toward an all-time high of $73k. However, the macro environment continues to be a challenge.

Please give your comments and feedback on this report. See you in the next block.

Sandeep Goenka