Welcome to the BTC Lighthouse report.

After touching a new all-time high on 14th March, Bitcoin fell to $62k and is back up near all-time highs.

In this report:

• I introduce my probabilities of Bitcoin price for this year
• Review Bitcoin ETFs
• The behavior of long-term and large investors
• Bitcoin Halving and more.

Despite the price rise, the BTC Lighthouse temperature is at 3.5, just at the border of the Neutral and Greed zone. Bitcoin seems to be consolidating at this elevated level before testing new highs.

Price Probabilities

Below is my probability of Bitcoin's price for the next 12 months. This probability is my subjective prediction of the price. The BTC Lighthouse temperature and the Bitcoin and macro news influence it.

I forecast a > 95% probability of a higher price than today, with a 5% probability of it being lower to account for inflation and unknown risks.

I will keep posting updates to this price when I see new information that changes my opinion. I am bullish about Bitcoin, but we must also be humble and protect our Bitcoin investments from unknown risks. The above probabilities take this into account.

Bitcoin vs Other Assets

Unless you predicted the AI revolution and that NVIDIA, a graphic chip company, would be the most important company in the AI value chain, Bitcoin has outperformed all other assets over most periods.

Bitcoin ETFs

Bitcoin's price continues to be dominated by Bitcoin ETFs. Bitcoin ETFs had a net inflow of ~200,000 Bitcoin since January. The inflows reached a peak on 15th March. Since then, it's been at the same level.

In tandem, Bitcoin went up by 75% from $40k to $70k. And since mid-March, it has remained at $65k-$70k levels.

So, the price is currently dominated by Bitcoin ETF flows.

Contrary to my earlier opinion, the current investors in these ETFs are not necessarily long-term investors and financial institutions. The ETFs attract volume from traders as they are a convenient way to trade Bitcoin compared to crypto exchanges.

No one can know the exact mix of investors in these ETFs. Surely, long-term investors will also exist, but they do not dominate them, as I originally reported. See the below CNBC interview with BITB Bitcoin ETF's CIO, who explains the investor mix in Bitcoin ETFs.

Summary

• ETF inflows influence the Bitcoin price.
• I expect volatility as traders rather than long-term investors account for a significant portion of ETF volumes.

Long-Term Investors Selling?

Long-term holders are at historic highs at more than 60%. However, after the mid-March all-time high, they have started selling and are currently at 65%. This is still higher than 40%, which has marked previous cycle peaks, or 55%, which marked the last cycle peak of $69k.

Summary

• For the Bitcoin price to test new all-time highs, long-term investors' selling needs to be set off by higher demand from Bitcoin ETFs.

Price Drawdowns

If you are new to Bitcoin and the price drawdowns of last month, know that the price drops of this cycle are very low compared to the previous bull runs.

Summary

• Bitcoin has experienced 20-50% price drops in previous bull cycles, and one should expect the same in the current cycle.
• Only in hindsight can one know if the peak is behind us.

Bitcoin Halving

Some Bitcoiners are talking about Bitcoin Halving and saying that Bitcoin will touch new all-time highs after a few months of the halving, like in previous cycles. The next Bitcoin halving is only 10 days away. However, I have a different opinion.

For new Bitcoiners, Bitcoin Halving is an event that happens once every 4 years, when the creation rate of new Bitcoins drops by 50%.

In the past 3 halvings, this event greatly impacted the Bitcoin supply. However, with each halving, its impact is significantly reduced. The past 3 cycles saw Bitcoin's supply drop by 50%, 20% and 11%. This halving will cause Bitcoin's supply to drop by 6%.

Summary

• This halving is a non-event and has no major impact on Bitcoin's supply, hence its price.
• I would attribute all future price increases to the demand, not Bitcoin ETFs, and not to this halving event.

Large Investors

Whales (large investors) are using this opportunity to buy Bitcoin. Since the launch of Bitcoin ETFs, the number of entities with more than 1,000 Bitcoin continues to increase rapidly.

The number of whales has always peaked before an all-time high, so it seems like a leading indicator of cycle peaks.

Summary

• The number of whales is increasing sharply, and Bitcoin's price is bullish.

Dollar-Cost Average Update

Historical data on Bitcoin cycles suggests that if you want to buy Bitcoin, you should DCA within days and not wait too long.

Conclusion

If you have been in the Bitcoin market for a long time, now is a good time to slowly start selling Bitcoin to build liquidity, knowing there is a high chance that Bitcoin's price will be bullish this year. This is to protect yourself from unknown risks.

If you are new to Bitcoin, it seems we are in the middle of a bull cycle, and I continue to be bullish because of the inflows into Bitcoin ETFs.

Learn

The Most Important Thing by Howard Marks is the best book I have read on investing. The video below provides a great summary of its key points.

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

Sandeep Goenka