A) Bitcoin rises due to the momentum from Wall Street ETFs and its fourth Halving.
B) Ethereum and its ETFs.
C) Fundamentals on the rise.
D) Fear and Greed Index.
E) Altcoins, cryptocurrencies alternative to Bitcoin.
A) Bitcoin rises due to the momentum from Wall Street ETFs and its fourth Halving.
Firstly, remember that Bitcoin Spot ETFs on the Wall Street stock exchange in the U.S. are new financial instruments through which investors can purchase the cryptocurrency. Currently, users who wish to acquire Bitcoin no longer need to learn how to manage a personal wallet or set up an account with a cryptocurrency exchange (like Binance), and they have the option to buy it directly on Wall Street thanks to the ETFs. The U.S. Securities and Exchange Commission (SEC) authorized the ETFs to be listed on Wall Street on January 10th.
If you want to delve deeper into Bitcoin and its ETFs, I recommend reading the last note I wrote on the subject on October 15, 2023, before Bitcoin effectively reaches Wall Street. The price of Bitcoin at that time was 27,000 USD:
Regarding Bitcoin halving, keep in mind that it is closely linked to the halving of new Bitcoin issuance-creation, occurring every 4 years. The last halving, the fourth, took place on April 20th.
Before the fourth halving, approximately 328,000 new Bitcoins were issued-created per year, and currently, after the fourth halving, 164,000 Bitcoins are issued-created per year, meaning that the supply of new Bitcoins has been halved, which is what causes the Bitcoin halving. The fifth halving will occur in 2028 when the issuance-creation of new Bitcoins will drop to 82,000 per year, and so on, halving the issuance-creation of new Bitcoins every 4 years.
If you want to delve deeper into Bitcoin and its Halving, I recommend reading the last note I wrote on the subject. At that time, the price of Bitcoin was 24,000 USD:
These two events were mainly what drove the price of Bitcoin to reach a value of 73,000 USD in March, meaning 3 months after it started trading on Wall Street and 1 month before its fourth halving. Both situations led to significantly increased demand for the asset.
On one hand, the ETFs were completely successful; for example, BlackRock (the largest investment fund in the world) has already purchased over 300,000 Bitcoins, and its ETF (IBIT) is the fastest to reach a value of 20 billion USD in the entire history of Wall Street, taking only 137 days. It should be clarified that this information is only about BlackRock's Bitcoin ETF, but there are several more ETFs from other investment funds (each with its own Bitcoin ETF), with the most notable being those from Invesco and Fidelity.
On the other hand, a Bitcoin halving attracts very positive expectations in the market because after each halving that has occurred (6-18 months later), there has been a progressive increase in the price of Bitcoin. With a reduced supply of new Bitcoins due to its halving, but an increase or stability in demand, its price rises. Let's observe what happened with the previous 3 halvings:
- The first halving occurred on November 28, 2012, and the price of BTC was 12 USD. 13 months after the event, on December 4, 2013, its price was 1,235 USD:
- The second halving was on July 9, 2016, with the price of BTC at 640 USD. 17 months after the event, on December 16, 2017, its price was 19,290 USD:
- The third halving was on May 11, 2020, with the price of BTC at 8,619 USD. 18 months after the event, on November 8, 2021, its price was 67,500 USD:
As you can see, there is a quite striking and clear pattern. Currently, in the fourth halving of Bitcoin, on April 20, 2024, its price was 64,000 USD.
Notice what BlackRock said about Bitcoin's halving in a report published in April this year:
- “The halving events are encoded in the source code of Bitcoin and are fundamental to the value proposition of BTC as a transparent crypto asset with a finite supply.”
- “These scheduled events allow Bitcoin to be slowly distributed in the market while maintaining its scarcity.”
- “Many cryptocurrency enthusiasts perceive the halving through a bullish lens, as a reduced rate of Bitcoin issuance could serve as a tailwind for the appreciation of its price in an environment of constant demand.”
B) Ethereum and its ETFs.
Firstly, it's worth clarifying that the financial market of blockchain technology is much more than Bitcoin, it all started with it, but it is a First Generation blockchain; currently, this technology has evolved and new assets (NFTs, among others) have emerged, as well as cryptocurrencies from new Second and Third Generation blockchains, which can use Smart Contracts.
One of these new Second Generation blockchains is Ethereum, the second largest cryptocurrency in the world by market capitalization (the first is Bitcoin). It was created in 2015 (Bitcoin in 2008).
There is a huge ecosystem functioning on its blockchain, with millions of transfers made daily. Here are some projects that utilize the Ethereum network:
On the other hand, here you can see how the explorer of its blockchain looks:
Thus, just as large investment funds wanted Bitcoin to come to Wall Street, they are now focusing their attention on Ethereum due to its tremendous success.
BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy, and Franklin Templeton have requested the U.S. Securities and Exchange Commission (SEC) to authorize them to have their own Ethereum ETFs. Finally, the SEC approved them, but the final steps are still being carried out to ensure they begin trading.
It would be just like with the Bitcoin ETFs; now investors will be able to buy Ethereum directly in Wall Street, instead of having to learn how to manage a personal wallet or set up an account on a cryptocurrency exchange (like Binance).
The Bitcoin ETFs were a total success on Wall Street, and the Ethereum ETF is expected to be the same. The price of 1 full Ethereum today is approximately 3,000 USD.
C) Fundamentals on the rise.
There are 2 factors that have caused the crypto financial market to fall in recent weeks.
Firstly, the payments to creditors of the Mt. Gox company. This company was an exchange (cryptocurrency bank) that defrauded its users and collapsed in 2014. Subsequently, after 10 years of a long legal process, the creditors will be compensated. The balance to be refunded amounts to 9 billion USD, which will be delivered in Bitcoin, Bitcoin Cash, and other additional funds.
On the matter, some analysts expressed concerns about the selling pressure that could occur if the Mt. Gox creditors decide to sell all the Bitcoins they receive, which have been inaccessible to them for over 10 years. This is purely speculative because it cannot be known exactly what they will do once they have them.
On the other hand, the police in Germany seized 50,000 Bitcoins at the beginning of this year in an operation against movie piracy and recently sold them all for USD. Here you can see the operation of the German government:
Thus, the fear regarding the Mt. Gox creditors and the sales of thousands of Bitcoins by the German government led to the fall of the crypto market in recent weeks, despite the fact that the industry is in full growth and international adoption.
Some analysts interpret this correction as a new bear market, similar to what occurred in 2022-2023, but this is a mistake since the contexts are completely different.
During the period of 2022-2023, it was the longest and hardest Bear Market in the history of cryptocurrencies, a context that was suitable for buying and accumulating as many cryptocurrencies, including Bitcoin and Ethereum, were almost excessively undervalued. This was caused by various negative factors occurring simultaneously, some internal to the crypto ecosystem and others external on an international scale. In the following graph, you can see how from the year 2022 until approximately September 2023, there was a downward period that lasted over 500 days:
Beyond the international factors that led to a downward market in most equity investments, such as the rise in interest rates by the FED (the central bank of the U.S.) or the war between Russia and Ukraine, etc., several historically negative events happened internally within the crypto ecosystem:
1) The ecosystem of billions of USD collapsed, that of Terra/Luna (this collapse was called the “Lehman Brothers” of cryptocurrencies).
2) Three Arrows Capital (3AC), one of the largest crypto funds in the world, went bankrupt.
3) Celsius, a major crypto-lender, collapsed (executives had withdrawn about 30 million USD beforehand).
4) Other companies similar to the previous ones, such as Genesis, BlockFi, and Voyager, also collapsed.
5) In addition, the bankruptcy of FTX occurred, at that time the second largest exchange (cryptocurrency bank) in the world, based in the Bahamas and founded by Sam Bankman-Fried, a “crypto-millionaire” who turned out to be a fraudster.
6) Cryptocurrency mining companies like Core Scientific collapsed.
7) The stablecoin USDC temporarily delinked from the dollar.
8) There was quite severe anti-crypto regulation in the U.S. propelled by the Democratic Party.
Thus, it is seen how during the period of 2022-2023, various negative (internal and external) events occurred simultaneously that caused the crypto market to collapse, but in this new period of 2023-2024, the context is completely different. Regarding positive external factors, the market currently indicates a 73% probability that the FED (the central bank of the U.S.) will lower interest rates this year in September; moreover, there are presidential elections in the U.S., among other factors. On the other hand, regarding positive variables directly linked to the crypto ecosystem:
1) Bitcoin has arrived on Wall Street and exceeded all anticipated technical expectations, being a total success.
2) BlackRock possesses over 300,000 Bitcoins.
3) The fourth Bitcoin halving occurred successfully, and currently, there is less supply of new Bitcoins.
4) Ethereum will reach Wall Street alongside the largest investment funds in the world: BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy, and Franklin Templeton.
5) Binance, the exchange (c
"The largest cryptocurrency exchange in the world set a new record this year and already has more than 200 million users. Coinbase, the second largest exchange in the world, reported earnings of over 1.6 billion USD in the first quarter of this year. CEO of BlackRock, Larry Fink, made statements such as: “Bitcoin is digital gold,” “Bitcoin is legitimate, it is a legitimate financial instrument,” and “Tokens are the next generation for markets.” Crypto is one of the most relevant topics in the presidential campaign in the U.S. The Republican Party supports Bitcoin like never before, as it recently published in its official platform: “Republicans will put an end to the illegal and anti-American offensive against cryptocurrencies by Democrats and will oppose the creation of a central bank digital currency.” Donald Trump, the main candidate for president of the U.S., declared this year: “I will make sure that the future of cryptocurrencies and Bitcoin is made in the U.S.”, “We want all remaining Bitcoins to be made in the United States!” and “Our country must be a leader in this field. There is no second place.” Donald Trump's vice president, DJ Vance, revealed that he has invested between 100,000 and 250,000 USD in Bitcoin. Furthermore, as I mentioned in other notes, there has been more private institutional adoption by already established companies, including: Visa, American Express, Mastercard, Google, Morgan Stanley, JP Morgan, Mercado Pago, McDonald's, PSG, AFA, Nissan, Nike, Adidas, Sony, Twitter (X), Samsung, Epic Games, Gucci, Bank Leumi, Heineken, Starbucks, Nasdaq, BNY Mellon, Telefónica, Warner Bros, Telegram, PayPal, Goldman Sachs, Bernstein, TradingView, Deutsche Telekom, Voltage, Credential Payments, Valkyrie, Forbes, Bloomberg, Microsoft, and many more. It is important to note that both points made are general; there are many other variables and several different events occurred during these two periods (2022-2023 and 2023-2024), both internationally and internally in the crypto market. D) Greed and fear index. This index demonstrates how much greed or fear exists in the crypto market. Currently, it is touching lows not seen since January 2023, meaning there is the same fear in the market that existed during the worst bear market in crypto history: [Image]. The previous indicator shows us how the crypto market can be completely irrational; that is, how can it be that the fear, in this current context, is the same as it was during the worst bear market in all of crypto history? Now, the greed-fear index is at levels not seen since January 2023, but the price of Bitcoin at these same lows is completely different; back then it was worth 16,000 USD, and today it is worth 63,000 USD, which means Bitcoin is worth almost 4 times more (400% more), with the same fear in the market. This demonstrates that it has great strength as an asset and that we are not in a bear market like that of 2022-2023. This differentiation is key in Bitcoin, but for most altcoins (alternative cryptocurrencies to Bitcoin, second and third generation blockchains), the same is not happening; there are tokens from high-quality projects/companies that are very undervalued, some at prices similar to those they had during the worst bear market in history (2022-2023). This is very important to emphasize because many opportunities can be leveraged for those who like to invest in the medium to long term. The overall fundamentals of the market are very good, and prices are very low. There are dozens of such projects/companies, including: Ethereum, Binance, Chainlink, Avalanche, among others. Thus, it is likely that we find ourselves in a period where we need to accumulate, and the best way to do so in such a volatile market is by applying DCA (Dollar-cost averaging). This is an investment strategy whereby an investor makes multiple purchases of a volatile asset over a period of time regardless of its price, achieving various different entry prices instead of making a single purchase. Additionally, it serves to enter your savings into the market in the most prudent way possible and without the need to be glued to the screen watching a chart. It should be clarified that this investment strategy has a very important requirement, which is that it is used during a context where the market is down, as is happening today. This strategy can also be applied to take profits and sell at different prices, not just to buy and accumulate. Finally, I emphasize that each reader must decide whether it is worthwhile or not to invest in Bitcoin or another asset in the short, medium, or long term, if they consider them undervalued. What I present is not an investment recommendation; everyone must conduct their own research and reach their own conclusions. One must always invest prudently, with buying and selling strategies. Investments here are very volatile and high-risk, especially for new users who are prone to falling victim to scams or thefts and/or purchasing at new historical price highs, only to sell during a significant correction, causing them enormous losses due to ignorance of the market cycles. The worst mistake one can make in this market is to be impatient and let oneself be carried away by greed or panic."
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