A) Bitcoin rises on the momentum of Wall Street ETFs and its fourth Halving.
B) Ethereum and its ETFs.
C) Fundamentals on the rise.
D) Greed and fear index.
E) Altcoins, alternative cryptocurrencies to Bitcoin.
A) Bitcoin rises on the momentum of Wall Street ETFs and its fourth Halving.
First of all, remember that Bitcoin Spot ETFs on the Wall Street Stock Exchange, USA, are new financial instruments through which investors can buy the cryptocurrency. Currently, users who would like to purchase Bitcoin, can dispense with learning how to manage a particular wallet or an account in a crypto exchange (cryptocurrency bank, such as Binance) and have the possibility to buy it directly on Wall Street thanks to ETFs. The U.S. Securities and Exchange Commission (SEC) authorized ETFs to be listed on Wall Street last January 10.
If you want to delve deeper into Bitcoin and its ETFs, I recommend you read the last post I wrote on the subject, on October 15, 2023, before Bitcoin actually arrived on Wall Street. The price of Bitcoin at that time was 27,000 USD:
Regarding the Bitcoin halving, remember that the halving is closely linked to the halving of the issuance-creation of new Bitcoins and happens every 4 years. The last halving, the fourth one, was last April 20.
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, i.e., the supply of new Bitcoins was reduced by half, that is what causes the Bitcoin halving. In the year 2028 the fifth halving will take place and 82,000 Bitcoins will be issued-created per year and so on, halving the issuance-creation of new Bitcoins every 4 years.
If you want to know more about Bitcoin and its Halving, I recommend you to read the last article I wrote on the subject. The price of Bitcoin at that time was 24,000 USD:
These two events were what mainly drove Bitcoin's price to reach a value of 73,000 USD in March, i.e. 3 months after it started trading on Wall Street and 1 month before it's fourth halving. Both situations produced that the asset is much more in demand.
On the one hand, the ETFs were completely successful, for example, BlackRock (the world's largest investment fund) has already bought more than 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, it only took 137 days. It should be clarified that this information is only about BlackRock's Bitcoin ETF, but there are several other ETFs from other investment funds (each one has its own Bitcoin ETF), among the most prominent are those of Invesco and Fidelity.
On the other hand, a Bitcoin halving, attracts very positive expectations to the market, this because after each halving that happened (6-18 months later) there was a progressive increase in the price of Bitcoin. As there was less new supply of Bitcoins due to its halving, but an increase or stability in its demand, its price went up. Let's look at what happened with the previous 3 halvings:
- The first halving was on November 28, 2012 and the price of BTC was 12 USD. 13 months after the event, by December 4, 2013, its price was 1,235 USD:
- The second halving was on July 9, 2016 and the price of BTC was 640 USD. 17 months after the event, by the day of December 16, 2017, its price was 19,290 USD:
- The third halving was on May 11, 2020 and the price of BTC was 8,619 USD. 18 months after the event, by November 8, 2021, its price was 67,500 USD:
As you can notice, there is a rather striking and clear pattern. Currently, at Bitcoin's fourth halving, on April 20, 2024, its price was 64,000 USD.
Notice what BlackRock said about Bitcoin halving in a report published in April this year:
- "Halving events are hard-coded into Bitcoin's source code and are fundamental to BTC's value proposition as a transparent cryptoasset with a finite supply. "
- " These timed events allow bitcoin to be slowly distributed in the market while maintaining its scarcity."
- "Many cryptocurrency enthusiasts perceive halving through a bullish lens, as a reduced pace of bitcoin issuance could serve as a tailwind for its price appreciation in a steady demand environment."
B) Ethereum and its ETFs.
First of all, it should be clarified that, the financial market of blockchain technology is much more than Bitcoin, everything started with it, but it is a First Generation blockchain, currently this technology evolved and there are new assets (NFTs, among others), as well as cryptocurrencies of new Second and Third Generation blockchains, in which there are and can be used the so-called Smart Contracts (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 running on its blockchain and millions of transfers are made per day. Here you can see some of the projects using the Ethereum network:
On the other hand, here you will be able to see how the explorer of their blockchain is visualized:
Thus, just as the big investment funds wanted Bitcoin to reach Wall Street, they now have their attention focused on Ethereum because of its great success.
BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy and Franklin Templeton, asked the U.S. Securities and Exchange Commission (SEC) to be authorized to hold their own Ethereum ETFs. Finally, the SEC approved them, but they are still going through the final steps for them to actually start trading.
It would be just like with Bitcoin ETFs, now investors will be able to buy Ethereum directly through Wall Street, instead of having to learn how to manage a particular wallet or some account in a crypto exchange (cryptocurrency bank, such as Binance).
Bitcoin ETFs were a total success on Wall Street and the Ethereum ETF is expected to be as well. The price of 1 whole Ethereum today is approximately 3,000 USD.
C) Rising Fundamentals.
There are 2 factors that caused the crypto financial market to fall in recent weeks.
First, the payment to creditors of 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 judicial process, the creditors will be rewarded. The balance to be repaid amounts to USD 9 billion, which will be delivered in Bitcoin, Bitcoin Cash and other additional funds.
On the matter, some analysts expressed concern about the selling pressure that could happen if Mt. Gox creditors decide to sell all the Bitcoin they receive, which have been inaccessible to them for more than 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 earlier this year in an operation against movie piracy and recently sold them all for USD. You can see the German government's operations here:
So, fears over Mt. Gox creditors and the German government's sales of thousands of Bitcoin caused the crypto market to fall in recent weeks, even though the industry is in full growth and international adoption.
Some analysts interpret this correction as a new bear market, just like the one that happened in 2022-2023, but this is a mistake as the contexts are completely different.
During 2022-2023 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 grossly undervalued. This was caused by different negative factors that happened at the same time, some internal within the crypto ecosystem and other external factors of an international nature. In the following graph you can see how from 2022 to approximately September 2023, there was a bearish period that lasted more than 500 days:
Beyond the international factors that produced a down market in most equity investments, such as the interest rate hike by the FED (US central bank) or the war between Russia and Ukraine, etc, internally within the crypto ecosystem several negative historical events happened:
1) Collapsed the billion USD, Terra/Luna ecosystem (this collapse was called the "Lehman Brothers" of cryptocurrencies).
2) Three Arrows Capital (3AC), one of the largest crypto funds in the world, collapsed.
3) Celsius, a major crypto-lender, collapsed (executives had earlier withdrawn some 30 million USD).
4) Similar companies like Genesis, BlockFi and Voyager also collapsed.
5) In addition, the bankruptcy of FTX, then the second largest cryptocurrency exchange (cryptocurrency bank) in the world, based in the Bahamas and founded by Sam Bankman-Fried, a "crypto-millionaire", who ended up being a swindler, took place.
6) Cryptocurrency mining companies, such as Core Scientifi, collapsed.
7) The USDC stablecoin was temporarily delinked from the dollar.
8) There was a rather seber anti-crypto regulation in the U.S. driven by the Democratic party.
Thus, it is glimpsed how in the period 2022-2023 there were several negative events (internal and external) at the same time that caused the crypto market to fall, but in this new period 2023-2024 the context is completely different. On positive external factors, we have that the market determines for now that there is a 73% probability that the FED (U.S. central bank) will lower interest rates this year in September, plus there are presidential elections in the U.S., among others. On the other hand, on positive variables directly linked to the crypto ecosystem:
1) Bitcoin hit Wall Street and surpassed all technical expectations predicted, being a total success.
2) BlackRock owns more than 300,000 Bitcoins.
3) The fourth Bitcoin halving happened successfully and currently there is less supply of new Bitcoins.
4) Ethereum will arrive on Wall Street hand in hand with the world's largest investment funds: BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy and Franklin Templeton.
5) Binance, the world's largest cryptocurrency exchange (cryptocurrency bank), set a new record this year and already has more than 200 million users.
6) Coinbase, the world's second largest exchange, reported earnings of more than 1,600,000,000 USD in the first quarter of this year.
7) 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 the markets".
8) Crypto in one of the most relevant presidential campaign issues in the U.S. The Republican Party supports Bitcoin as never seen before, in its official platform recently published: "Republicans will put an end to the illegal and un-American offensive against cryptocurrencies by Democrats and oppose the creation of a central bank digital currency".
9) Donald Trump, leading candidate for U.S. president, stated this year, "I will make sure that the future of cryptocurrencies and Bitcoin is manufactured in the U .S.", "We want all remaining Bitcoins to be manufactured in the United States!" and "Our country must be a leader in this field.There is no second place".
10) Donald Trump's vice president, DJ Vance, revealed that he owns invested in Bitcoin between 100,000 and 250,000 USD.
11) In addition, as I mentioned in other notes, there was more private institutional adoption by already established companies, including: Visa, American Express, Mastercard, Google, Morgan Stanley, JP Morgan, Mercado Pago, Mac Donald, PSG, AFA, Nissan, Nike, Adidas, Sony, Twitter (X), Samsung, Epic Games, Gucci, Bank Leumi, Heineken, Starbucks, Nasdaq, BYN Mellon, Telefónica, Warner Bros, Telegram, PayPal, Goldman Sachs, Bernstein, TradingView, Deutsche Telekom, Voltage, Credencial Payments, Valkyrie, Forbes , Bloomberg, Microsoft and many more.
It should be noted that both scores made are general, there are many other variables and several different events happened during these 2 periods (2022-2023 and 2023-2024), both internationally and internally in the crypto market.
D) Greed and fear index.
This index shows how much greed or else how much fear there is in the crypto market. It is currently touching lows not seen since January 2023, i.e., there is the same fear in the market as there was during the worst Bear Market in crypto history:
E) Altcoins, alternative cryptocurrencies to Bitcoin.
The above indicator is showing us how the crypto market can be completely irrational, i.e. how can it be that the fear, in this current context, is the same as it was during the worst Bear Market in all crypto history?
Now, the greed-fear index is at lows 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, i.e. Bitcoin is worth almost 4 times more (400% more), with the same fear in the market. This shows that it has great strength as an asset and that we are not in a Bear Market as in 2022-2023.
This differentiation is key in Bitcoin, but in most of the Altcoins (alternative cryptocurrencies to Bitcoin, second and third generation blockchains), the same is not happening, there are very undervalued tokens of very high quality projects/companies, some at prices similar to those they had during the worst Bear Market in history (2022-2023). This is very important to note because there are many opportunities for those who like to invest for the medium to long term. The overall fundamentals of the market are very good and the prices are very low. There are dozens of such projects/companies, among them: Ethereum, Binance, Chainlink, Avalanche, among others.
Thus, we are likely to find ourselves in a period where we have to accumulate and the best way to do it in such a volatile market is by applying DCA (Dollar-cost averaging, i.e. 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 value, obtaining several different entry prices, instead of making a single purchase. In addition, it serves to enter your savings to 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, and that is to be used during a context where the market is down, as it is happening today. This strategy can also be applied to take profits and sell at different prices, not only to buy and accumulate.
Finally, I emphasize that each reader must decide whether or not it is worth investing in Bitcoin or another asset in the short, medium or long term, in case he or she considers them undervalued. This is not an investment recommendation; everyone must do their own research and reach their own conclusions. You should always invest prudently, with buy and sell strategies.
Investments here are very volatile and high risk, especially for new users who are prone to fall into scams or robberies and / or buy at new historical highs of prices, and then sell in a major correction, causing huge losses due to ignorance of the marking cycles.
The worst mistake you can make in this market is to be impatient and get carried away by greed or panic.
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