The Halving Draws Near.
What to expect from the upcoming 4-year appointment that the crypto world waits with bated breath, and what happened to shape up the current market before the halving drops us in uncharted waters.
Where we are now.
Bitcoin’s fourth halving is just around the corner, and there is no shortage of important news regarding multiple aspects of the crypto world flying around, with wild price predictions for both BTC and the ALT world, and with very few people trying to be objective and simply relaying cold hard data to inform the crypto community more neutrally.
The weekend was decidedly turbulent, with one of the worst flash crashes of the last few months and it was a stark reminder that the current geopolitical situation doesn’t bring itself to the forefront screaming prosperity and that for all of our worries, our slice of the market has had an amazing first quarter, despite the awful things happening in multiple countries all around the world.
A quick timeline of this weekend’s flash crash.
On Friday, before the US exchanges opened, BTC was still trading at around $70,000, with new heights in sight of a simple new rally before the day of the Halving.
However, the European rallies had already started to creak in the second half of the trading session, and with the falling opening of the US exchanges BTC also started to fall.
Friday’s descent, however, had rested on what seemed to be a good support cutoff, namely the $66,000 level, although, for a very brief moment, it had almost touched the $65,000 mark, starting to show some of the panic that would soon spread like wildfire through many retail investors.
Once the stock exchanges closed for the weekend it looked as if the crypto markets might take a breather, but instead, a real mini-collapse set in.
Late in the day on Saturday, news broke of Iran’s missile attack on Israel, and with the stock exchanges closed, the negative effect was felt especially on the crypto markets that took the brunt of what many seemed to believe was the start of WW3.
The price of BTC plummeted in a few hours to below $62,000, a level not seen since 20 March, almost a month ago.
Afterward, however, it immediately made an initial rebound, which brought it back to at least the $63,000 cutoff, but that wasn’t reason enough for anyone to rejoice, with the ALT market receiving the worst of the deal, losing almost 1.2 billion in the span of a weekend.
Tonight, however, we saw the first of many probable fast market reactions, probably due to the good news coming out of Hong Kong, and the price first bounced back to $65,000 and then even above $66,000, while at the time of writing, we are seeing BTC try and reach for the $67,000 mark.
While not everything was recovered, the auspicious opening of this week’s markets gave us a true show of what kind of volatility can be expected in the months before and after the halving happens, and we are more than willing to share with our community how to approach such volatility with a clear mind, a strategy and the willingness to implement it.
The good news from Hong Kong
The news was already anticipated by Bloomberg just this month, but tonight it became official: the Hong Kong Securities and Futures Commission (SFC) approved spot ETFs on Bitcoin and Ethereum, bringing the Asian market to the forefront in this new mini rally we saw following this weekend losses.
This means that as many as three new BTC and ETH spot ETFs are expected to debut on the Hong Kong exchange soon, which opens more doors for both investors coming from the old continent and for savvy investors able to spot trends and willing to explore overseas ecosystems.
And while this news could be enough to lift the price on its own, we have yet to see the true effect it will have on the market as a whole, simply because It is still unclear whether all Chinese investors will be able to access these new products, or only those resident in Hong Kong.
If the Hong Kong exchanges will be able to accommodate the entrepreneurial surge coming from the entirety of the Asian markets we are in for a while ride, but at the moment everyone is just waiting for the next move from the Chinese government.
It has been reported that Chinese funds will be banned from buying the shares of the new BTC and ETH ETFs for the time being, but as we all know at the end of the day what matters the most is the retail market, especially with the capillarity that the Web3 world is slowly heading towards this year.
Just to give some context on this statement, while many of us are aware of the effects whales can have on the market, we already have multiple US ETFs that have clearly shown that institutional investors, such as large funds, have not yet started to take major positions in these derivatives, probably because they are waiting for a better moment to enter the market in a period of wild upheavals.
The huge success of the new SPOT BTCs ETFS in the US is mainly due to retail investors, but the same might not be true for Hong Kong TFs if Chinese people residing on the continent are banned from buying their shares.
While the Hong Kong territory is heavily influenced by the decisions made by its neighbors, it is still an autonomous territory with laws that sometimes differ from those in mainland China, and as such we will need to wait before knowing if the market has indeed opened for such a huge number of retail investors.
Only if the Chinese people residing in mainland China are also allowed to invest in these ETFs could the price of Bitcoin be positively affected by their landing on the stock exchange.
The team at Synapse is not surprised to see that while we had somewhat of a rally, the market is still lukewarm and waiting for more positive news before pushing down the pedal and reaching for a new upsurge.
The Fourth Halving of BTC
There are now only about 700 blocks to go before Bitcoin’s next halving.
The halving will take place exactly at block number 840,000, and right now BTC’s blockchain has arrived at block number 839,331.
At the rate of about one block every 9.5 minutes it will take less than five days before block number 840,000 is mined.
Therefore, we know that the halving should arrive more or less on the night between Friday 19 and Saturday 20 April 2024 giving us a few days to think about what a new halving means for us and what we can expect for the next few months.
This is the fourth halving in Bitcoin’s history and will consist of halving the BTC given as a prize to those who manage to mine a block.
The important thing is that this prize consists of BTC created from nothing, and this is the only existing and possible form of creating new BTCs.
So the halving is not only the main measure of Bitcoin’s monetary policy, but it is also the only true one, since market sentiment is and will always be based around the investors and not the currency itself.
Since the miners who collect this premium tend to sell the BTC received, to finance the high expenses of their hash mining and block validation activities, a reduction in the premium should induce a decrease in the supply of BTC on the market.
This has already happened in all three previous cases (2012, 2016, and 2020), and, not surprisingly each of those years was followed by a big bull run that all 3 times lasted through 4 quarters.
To give you some numbers to crunch, the first halving in 2012 brought us up 385% before the halving and 5095% in the following year, the second in 2016 was a 142% jump followed by a respectable 284% increase, and the third halving in 2020 came in more poised with an initial increase of 17% before the halving and a plus 559% in the following year.
Now, what we need to do is some technical analysis because this year seems to be quite different, mainly because after 3 months of almost straight greens we can say that the Bull Run started even before the halving occurred.
Moreover, it will be a cut of 450 BTC per day, which is half that of 2020 and a quarter that of 2016.
In addition, new all-time highs have already been recorded, last month, so a drop in the price of BTC after halving cannot be ruled out.
And here is where we speak directly to our community in a way that nobody seems to be doing. Huge news gateways, analysts, crypto tubers, influencers advisors and hopefuls alike are all giving wild price predictions, either fostering a climate of full-blown moon reaches or absurd crashes.
Synapse knows better, not because we are psychics or because we know the future a la Nostradamus, and we will exactly predict how the price will move but because we are simply willing to acknowledge that the only surety we have is that we will be in for a wild ride.
Our market is still painfully young, and to try and follow it in all of its moving parts is a fool’s errand. We simply want to give you an informed, unbiased rundown of what happened in the past and let you decide how to approach what the future has in store for us.
Today we talked about what happened and what’s happening, but we don’t want to leave you hanging, so we will be coming back soon with a new entry in our crypto jungle series to better understand what can be reasonably expected from the market in the coming months, and how to tackle this market without risking foolish movements simply due to a lack of preparation.
As always, stay tuned for more news from the Synapse Network team, check out our Medium for new opportunities, and if you want to come and have a chat with our team we are always available here on Telegram.
