Welcome to the BTC Lighthouse report.

After an all-time high of $73k, Bitcoin crashed for the third time last month to ~$60k.

In this report, I discuss:

• Bitcoin ETFs
• how banking crises and wars have impacted Bitcoin in the past with an eye on the Middle East war and
• the behavior of Long-Term Holders and Whales.

The BTC Lighthouse temperature went back to the Neutral zone.

Bitcoin ETFs

Bitcoin ETFs have continued to show lackluster inflows since my last report.

The Middle East War And Bitcoin

The war in the Middle East now means that the US is on the brink of getting involved in a second war besides Ukraine.

The macro-environment remains confusing, with conflicting data on inflation, commodity prices, and the Fed's interest rate cuts. This confusion is causing volatility in Bitcoin and other assets like stocks.

In the short term, Bitcoin behaves like a risk asset, similar to technology stocks. So when there is a risk-off sentiment in the market, like what happened after Iran attacked Israel, Bitcoin and stocks drop.

However, Bitcoin de-couples and follows its cyclical path in the long term.

Below are examples of how Bitcoin has reacted during banking crises or wars.

Cyprus Banking Crisis, March 2013

Bitcoin shot up to new all-time highs after the Cyprus Banking crisis.

Greece Banking Crisis, 28th June 2015

Bitcoin's price went up again after the Greece Banking crisis in 2015.

FED Covid Stimulus, 15th March 2020

The FED responded to COVID with a massive stimulus. Bitcoin's price touched new all-time highs after that.

Russia-Ukraine War, 24th Feb 2022

Bitcoin's price did not change in response to the first war in its history. Overall, there was already a downward trend in response to the Fed's rate increase, and that trend continued.

US Bank Failures, 10-15 March 2023

The period saw the failures of 2 US banks and the bailout of 1 US bank and the Swiss bank Credit Suisse. Bitcoin reacted with an increase in price and the start of a bull cycle.

Israel-Palestine War, 7th October 2023

Unlike the Russia-Ukraine war, Bitcoin's price went up after the Israel-Palestine war started, though it might not have directly been in response to the war.

Isreal-Iran War, 13th April 2023

So far, Bitcoin and other assets like stocks have dropped on the news of this war.

Conclusion

In the past, Bitcoin has increased in price in response to a banking crisis. The impact on its price in reaction to global wars is not clear. However, it has never dropped in price.

Bitcoin has behaved like a haven whenever there is a loss of confidence in the banking sector or the US Dollar. And this time, it will be no different.

In times of crisis, Bitcoin is the best safe-haven asset because it has no counterparty risk. After increasing by more than 50% in just three months, Bitcoin seems to be consolidating before the demand kicks in again.

Long-Term Hodlers Vs Whales

Long-term hodlers continue to sell Bitcoin.

In the past, the price kept increasing until the percentage of sellers reached a base level (see the green circles below). This base level has increased in every cycle, as shown by the red line below.

Long-term hodlers have dropped from a high of 70% to 66% as they book profits at higher prices. But they still have a long way to go before touching the base—see the red circle below. Bitcoin's price has the potential to keep moving up until then.

At the same time, the number of whales is increasing, showing a healthy demand for Bitcoin. As mentioned in my last report, I would be concerned when whales start selling as it has been a leading indicator of a cycle top.

Summary

• Bitcoin is going through a consolidation phase.
• I expect volatility in a confusing macro environment.
• I continue to be bullish about Bitcoin this year and expect a resumption in inflows in Bitcoin ETFs.

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

Sandeep Goenka