Hello Investors,

Crypto is down about 11% in the last 2 weeks and we have a mix of market signals.

We had a week of record inflows, followed by a week of outflows after the FOMC meeting. All while S&P and Nasdaq keep pushing their ATHs.

Let’s explore deeper.

In This Letter

• FOMC Meeting

• Ether ETFs could start trading in early July.

  • What does it mean for investors?

• How I see the market.

FOMC Meeting

Last Wednesday we received the CPI numbers, which indicated that inflation remained stable and unchanged in May. Markets reacted positively, resulting in $100m inflows into crypto assets*.

Later on Wednesday, we heard hawkish comments after the FOMC meeting, with FED announcing that rates will remain unchanged, and signaling that there should be only a single rate cut in 2024.

Nasdaq and S&P 500 took the positive news out of this, attacking new all-time highs, while crypto retracted and saw outflows in the next days, finishing the week in the red.

According to CoinShares, the outflows were $600m, the highest number since March 22.

Ether ETFs could start trading in early July.

The last time I wrote to you, we had the first (19b-4) approval for the ETH ETFs.

Back then it was estimated that the second (S-1) approval, and with that trading, could take up to 8-12 weeks.

I mentioned the SEC requested expedited fillings which might result in faster approval.

Now, Bloomberg analyst Eric Balchunas mentions it is likely the approval will happen much sooner - 2nd of July.

What does it mean for investors?

• ETH ETFs could trade as early as the beginning of July,

• This would result in new liquidity coming to ETH,

• Price is likely to react before, with the approval.

There is a chance this is already priced in and the move will be only cosmetic, or on the other side —> sell the news event.

That does not matter in the long run, it is a big milestone for crypto and should help classify ETH as an asset and reduce the uncertainty around it.

Not to mention the inflows will come, and ~1/3 of ETH is locked and out of circulation —> the price impact will be that bigger with new money flowing in.

How I see the market.

While the price is down, there are too many events around crypto, signaling stronger adoption and interest from big institutions, policymakers, and investors.

Just a few recent highlights:

• PayPal partnering with Solana*,

• Stripe launching stablecoin payments*,

• Fidelity entering JP Morgan’s blockchain*,

• The SEC drops the lawsuit against Consensys*,

• Trump is a vocal crypto supporter and Biden is slowly adapting*,

• BlackRock’s BTC ETF might overtake their iShares Gold ETF this year*,

• BlackRock CIO for ETFs ($6.6T AUM) signaling public blockchains (such as ETH or SOL) are the way, not private blockchains*,

Lastly, on Tuesday this week, the SEC dropped their investigation of Ethereum, which many interpret as a major regulatory victory and classification of ETH as a commodity, not a security*.

There might be another drawback, even a bigger correction or a black swan event that would crash the market for months, but when we explore the macro cycle and past BTC cycles, the real action is yet to happen.

Liquidity is expected to come end of 2024, and peak around summer 2025.

Previous BTC cycles suggest the period from the bottom to halving, and from halving to the top, is almost the same.

If history is to rhyme this time as well, we are looking towards summer 2025 for the market tops and DCA out of the crypto towards stables or other assets.

It will be difficult to cross $80k, but once we are past $100k, the media attention will help drive the price to new ATHs above that mark.

Before that, we can enjoy these periods of market drawbacks to accumulate and rebalance the portfolio as desired.

While talking about possible ATHs, many institutions estimate BTC to cross $150k next year, Bernstein for example predicts approval by major warehouses and has a $200,000 target by the end of 2025.

Regards,