Bitcoin Hits $71,000 Again, Ethereum ETF Receives Approval & Crypto Bill Moves Forward in the U.S.
June 2, 2024
Stay up to date with our monthly market commentary:
- Bitcoin recovers strongly, with a high of $71,000 in May
- Ethereum spot ETFs receive approval by the SEC
- Bitcoin celebrates over 1 billion transactions
- Bitcoin (BTC) is up 11%, while Ether (ETH) is up 25% versus last month.*
Market Overview - May
The price of Bitcoin (BTC) increased by 11% in May, ending the month at around $68,000, recording its fourth green month in 2024.
After a pause in April, capital inflows into spot BTC ETFs (exchange-traded funds) in the U.S. have picked up again. Aligning with the inflows, we also saw a Bitcoin price recovery, reaching a high of more than $71,000 during the month.
The potential the continuance of the Bitcoin rally this year remains, given the rate at which spot BTC ETF issuers have been buying BTC since the start of the year. Moreover, after the halving in April, the supply of newly issued BTC halved to around 450 BTC per day and long-term investors have started accumulating BTC again.
The coming months will be an interesting time for developers and investors alike, where new and improved solutions might increase demand for BTC and help attract new investors.
Developers are continuing their work on various Bitcoin scaling solutions, including the Lightning Network, while protocols for issuing tokens on the Bitcoin blockchain, such as Ordinals and Runes, might also increase demand for BTC.
Regulation will play a pivotal role in increasing adoption and, with the new FIT21 bill in the U.S., investors in America might get some guidance as to how the market will be regulated.
In May, the Bitcoin network celebrated a milestone, having surpassed 1 billion transactions on-chain. Bitcoin managed to reach this in just 15 years, outpacing the Visa network.
Crypto Asset Market Performance Review
The crypto asset markets finished the month a leg higher, with some of the top 10 assets by market capitalization increasing by more than 30%.
After the first red month this year in April, BTC saw a peak through performance in May, closing approximately 11% higher month-on-month, surpassing $71,000 mid-month.
The price of Bitcoin was propelled by increased inflows into the spot BTC ETFs.
One of the biggest benefactors of this inflow was BlackRock’s ETF (iShares Bitcoin Trust (IBIT)), which nearly reached the $20 billion assets under management milestone in May and overtook Grayscale’s ETF (Grayscale Bitcoin Trust (GBTC)), becoming the largest BTC fund in the world.
In addition to Bitcoin, Ethereum saw an increase, finishing the month 25% higher. This was due to the somewhat unexpected fast approval by the U.S. Securities and Exchange Commission (SEC) for spot ETH ETFs. Similar to the Bitcoin ETF launch, the market reacted positively, increasing demand for ETH in anticipation of the upcoming trading start by the end of June.
Next to the two biggest crypto assets, the largest gainer this month was Solana (SOL) at more than 30%, primarily driven by an increase in the trading of Solana-based memecoins.
The remainder of the top crypto assets market followed suit and finished the month in the green.
May brought the approval of the FIT21 bill by the U.S. House of Representatives. Among other things, the bill establishes the roles of the SEC and the Commodity Futures Trading Commission (CFTC) in regulating the crypto asset market and introduces a "decentralization test" to help categorize crypto assets as either commodities or securities. While it still needs to be voted on by the Senate, this is a major step toward regulatory clarity in the U.S. and a sight to behold for builders, businesses, and regular users.
Bitcoin Tech Update
Bitcoin’s Layer 2 season continues to strive. This month, we saw updates to the Lightning network.
The updated Lightning Network Daemon fixed multiple bugs and added experimental support for inbound routing fees and a fee bumper, among other things.
Additionally, the first-ever Taproot Asset swap on Lightning was announced. The Taproot Asset protocol aims to bring new use cases to Bitcoin, including the possible issuance of stablecoins on this blockchain.
Furthermore, we continue to see updates pushed regarding tokenization and building on the Bitcoin blockchain.
Institutional Interest in Bitcoin
May was an eventful month for institutional digital asset investors, with BlackRock’s Bitcoin ETF (IBIT) becoming the biggest BTC fund in the world.
BlackRocks’s Bitcoin ETF is now the biggest Bitcoin fund
IBIT has reached nearly $20 billion in assets under management.
As of May 30, BlackRock holds 289,035 BTC in its ETF, surpassing Grayscale’s ETF with 286,969 BTC. Ever since the launch of the ETFs, Grayscale has witnessed substantial outflows of its ETFs, mainly due to the high fees it charges.
Hong Kong spot Bitcoin ETFs are off to a slow start
With the success of spot Bitcoin ETFs in the U.S., it was only a matter of time until the market saw similar products launched in other countries or continents.
Investors didn’t have to wait long, as Hong Kong was the next market to step up and commence trading spot Bitcoin ETFs in late April. This month was the first whole month of trading and, thus far, interest seems to be significantly lower than that of their counterparts in the U.S. In the past week, there were no inflows to these funds, which are not (yet) available for China’s mainland investors.
Bitcoin on Balance Sheets
Semler Scientific, which declared that BTC is becoming its primary reserve asset, purchased 581 BTC for $40 million. In the wake of this revelation, the company's shares shot up by around 25%.
Metaplanet, a publicly traded Japanese company, announced this week that it will invest an additional $1.6 million in BTC, adding to the 117.7 BTC the company already holds in its treasury as part of its Bitcoin investment strategy.
*Closing price data is from May 30, 2024