For the fourth consecutive week, the American spot bitcoin ETFs launched in January have shown positive figures. This trend continues, with an influx of over $800 million on Tuesday. It appears that bitcoin is shaking off its spring lethargy and gearing up for a bright summer. Will this forecast hold? More on that in this Weekly!

This Weekly in brief:

• Market: Bitcoin's price is at $71,000 and Ether is at $3,800. Both coins have been at the upper end of their price range for the past three months. The bitcoin ETFs witnessed the second-largest inflow ever yesterday.
• News: In May, two publicly traded companies presented their vision for bitcoin and how the cryptocurrency will play a strategic role in managing their cash reserves. Is the so-called Michael Saylor strategy finally gaining traction?

Market update

Since the launch of the American spot bitcoin ETFs on January 11, analysts have been closely monitoring the cash flows into these funds. Would the ‘bitcoin IPO’ be the success everyone hoped for?

The answer is a resounding yes. BlackRock’s bitcoin fund broke a series of records, including the fastest growth ever to a size of $20 billion. Even when looking at the ten ETFs, including Grayscale’s fund, which saw significant bitcoin outflows, the launch has been a massive success with nearly $15 billion in capital flowing in.

But what does this inflow into ETFs mean? When someone buys shares in a bitcoin ETF, no bitcoins are ‘taken off the market,’ as is sometimes reported. Trading in bitcoin ETFs is part of the market. When money flows into bitcoin ETFs, no new bitcoins are created or destroyed. Only the form in which they are held changes.

However, we’ve seen the largest inflow into ETFs during weeks when the bitcoin price rose rapidly. That can’t be just a coincidence, can it?

The question is whether ETFs genuinely provide a new group of investors with access to bitcoin. Do ETFs tap into demand that wouldn’t exist without them? Alternatively, is the inflow to ETFs mainly from existing bitcoin holders who prefer an ETF over holding bitcoin at a crypto company or in their wallet?

There’s no precise answer to this question. But it’s plausible that at least part of the demand is unlocked by the existence of ETFs. Reports to the SEC indicated that about 15% of the bitcoin ETF shares are held in institutional investors' portfolios.

Therefore, the capital flowing in and out of ETFs remains a daily topic of discussion. In April, we saw four weeks of moderate outflow, and in May, four weeks of moderate inflow. The first week of June started with a bang: on June 4, we saw an inflow of $887 million (1), the second highest ever, following March 12 (2).

Coincidence or not, bitcoin’s price is also performing well this week. It has been hovering around $69,000 for two weeks, the highest point of the 2021 bull market. Yesterday and today, we saw prices around $71,000, which is 25% higher than the (temporary) bottom of this correction: $56,500 on May 1.

This means we’ve been stuck in the price range between $60,000 and $73,800 for over three months. A boring market, some say. When can we expect some action again?

Let’s first take a moment to appreciate that we find prices above $60,000 boring. In 2021, these prices sparked wild enthusiasm and euphoria. Back then, we saw the two peaks of the bull market at $64,000 and $69,000. Now it appears to be just a pause at the beginning of the bull market.

The primary trend is still upward. On the monthly and weekly charts, we see higher highs and higher lows. Within the long-term trend, you sometimes see counter-movements in the short term. This is what we call a correction. In the chart below, you see several lower highs (LH) and one higher high (HH) within this correction.

Most indicators suggest that after this correction, we will resume the primary trend and enter a new period of increase. The timing is more uncertain. There are various plausible scenarios, from a swift all-time high to several more months sideways within the current price range. However long it takes, once we break out, it could happen quickly!

News overview

The major macroeconomic changes of the past decade forced Michael Saylor – the CEO of publicly traded MicroStrategy – to reassess his business strategy. He realized that he should no longer look to the operational side that generates cash for new growth, but to the reserves that were melting away.

Thus, the modus operandi known as the Saylor strategy slowly emerged. A revision of corporate finance – everything related to the financing and financial activities of a company – which some have dubbed the ‘Trade of the Century.’

Saylor began executing his plan in 2020. His initial $250 million investment in bitcoin garnered significant attention. The resulting value increase allowed him to attract more capital through bond issuances and other financing methods. Saylor then reinvested this capital in bitcoin, creating a self-reinforcing cycle.

MicroStrategy's bitcoin purchases (🟢) since 2020. In total, MicroStrategy now owns 214,400 BTC worth $145 billion.

Over the years, Saylor has invested slightly more than $75 billion in bitcoin with MicroStrategy. Due to bitcoin’s value increase, that amount has grown by over 90% to $145 billion at the time of writing. Additionally, MSTR’s stock price has risen by more than 1100% in five years, placing the stock in a category of exceptionally rapid growers on Wall Street.

In een recente podcast a recent podcast, Saylor mentioned that he views 2024 as a pivotal year. He sees his strategy as feasible for the masses only since this year. Previously, accounting rules were so restrictive – bitcoin’s value could only be adjusted downward – that the option to invest in bitcoin wasn’t even considered. “The FASB changing its guidelines was a decisive moment,” Saylor said.

In this context, it was notable that in May, two organizations announced their bitcoin strategies: Metaplanet and Semler Scientific. Metaplanet is listed on the Japan Exchange and has grown by providing financial advice. The company has enlisted bitcoin analyst Dylan LeClair to align its internal compass with bitcoin. Semler Scientific is an American company that writes software for healthcare. In a press release, the company explained the strategic role bitcoin plays. Investors expressed their support for the strategy through their wallets: both companies saw their stock prices rise by tens of percent.

Meanwhile, 41 publicly traded companies are known to have bitcoin on their balance sheets. That’s just a fraction of the total 60,000 companies listed on exchanges. It may feel like only one sheep has crossed the dam. But you know the saying!

Other news:

• Users of Gemini Earn will receive all their crypto holdings back. This is great news for Gemini customers who were affected by the bankruptcy of the lending company Genesis. Genesis encountered problems in November 2022 after FTX collapsed. For a long time, it was uncertain whether and how much Gemini customers would recover from the funds they had stored there via Gemini. Receiving everything 'in kind' is beyond expectations.

• Biden has vetoed the bill that overruled the SEC's decision. The president used his veto power, stating that he made this significant decision "in the interest of consumers and investors." This decision opposes the wishes of politicians, crypto companies, and banks. It is possible to override the veto, but it requires a two-thirds majority in both houses of Congress. The chances of this happening are slim.

• A third of American voters find candidates’ crypto policies important, according to a recent poll. Nearly 80% believe that a presidential candidate's stance on crypto should be “well-informed.” The poll was funded by fund manager Grayscale.