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  • 3… 2… 1… Halved! Bitcoin Hits Milestone in Mining Shift

3… 2… 1… Halved! Bitcoin Hits Milestone in Mining Shift

And Bitcoin equities look set to impress as earning season picks up the pace

Crypto News

Bitcoin's Monumental Halving Event: A Historic Milestone in Crypto Evolution

Bitcoin underwent its 4th ever-halving on Friday, with prices managing to remain relatively stable. Before the event, Bitcoin had experienced a dip to $59,600, only to rebound to a high of $65,450. As of Saturday afternoon UK time, it is hovering around $63,803. The halving event involves the reduction of miner block rewards by half, from 6.25 to 3.12. Whether the halving was already factored into the price remains uncertain.

In the lead-up to the halving, there was significant volatility over the last couple of months. This could be attributed to miners capitalising on the opportunity to profit, aiming to cash out their Bitcoin at a higher value than before the event. Historically, previous all-time highs have occurred post-halving. However, this marks the first time in Bitcoin's history that its price has hit an all-time high before the halving. Since its November 2022 low of $15,479, Bitcoin has surged to its most recent all-time high of $73,794 last month, representing a remarkable 376% increase.

Investors and analysts are now eagerly awaiting to observe whether Bitcoin's price will climb to new heights following this halving event. Despite this optimism, there are ongoing geopolitical issues worldwide that pose challenges for Bitcoin. It remains to be seen whether Bitcoin, the world’s largest digital asset can navigate these obstacles in the short to medium term.

Hong Kong Breaks Ground: Bitcoin and Ethereum Spot ETFs Gain Regulatory Green Light

The Securities and Futures Commission (SFC) of Hong Kong made history by approving the first Hong Kong Spot Bitcoin and Ethereum Exchange Traded Fund (ETF) on Monday. This marks a significant milestone, as it is one of the first instances globally where a regulatory authority has given the green light to an Ethereum Spot ETF. Among the entities granted permission to issue ETFs are ChinaAMC, Harvest Global, and Bosera International.

A Bitcoin or Spot ETF is a financial instrument offered by a regulated company, enabling investors to gain exposure to the price movements of the asset without the necessity of owning the underlying asset itself. Hong Kong, as an administrative region of China, adds a distinctive dimension to this development. Regulatory efforts in Hong Kong have long aimed at establishing the region as a regulated crypto hub, especially noteworthy considering mainland China's effective ban on cryptocurrencies in 2021.

ChinaAMC announced regulatory approval for the provision of "virtual asset management services" and expressed active involvement in their development. In January, the US Securities and Exchange Commission approved 11 Spot ETFs, a move that has proven highly successful, attracting $12.5 billion in net positive inflows since they were launched. However, it's crucial to recognise that while Hong Kong's ETF approval signifies a positive stride in cryptocurrency adoption, its impact on market dynamics may not be substantial.

Analysts anticipate that the inflows generated by Hong Kong ETFs will likely fall short of significantly influencing markets, estimating around $1 billion over the initial two years. Nonetheless, this development is widely regarded as a positive step towards broader global adoption of cryptocurrency.

Kraken Unleashes World's First Open-Source Digital Wallet

Kraken, the second largest cryptocurrency exchange in the United States, has recently unveiled its digital hot wallet, following the footsteps of other prominent exchanges like Coinbase, Binance, OKX and MetaMask. This new offering empowers Kraken users to securely store their digital assets while retaining full control over their cryptocurrency holdings—a concept known as self-custody. By eliminating the reliance on third-party entities such as centralised exchanges, individuals can exercise greater autonomy over their investments.

Dubbed the 'Kraken Wallet,' this platform, launched last Wednesday, supports a variety of blockchains, including Bitcoin, Ethereum, Optimism, Solana, Base, Arbitrum, Polygon, and Dogecoin. It marks a significant step forward for Kraken in providing a comprehensive storage solution for a diverse range of cryptocurrencies.

It's essential to distinguish between hot wallets and cold wallets. While cold wallets, like those offered by Ledger and Trezor, provide an offline storage solution disconnected from the internet—thus minimising the risk of online hacks—hot wallets remain permanently connected to the internet. Although this connectivity facilitates faster and more convenient transactions and trading activities, it also exposes them to greater vulnerability to hacking attempts.

Kraken emphasises that user activity within its infrastructure is shielded, safeguarding users' identities, locations, and IP addresses from potential threats. Moreover, the Kraken Wallet minimises data collection to the bare essentials required for wallet functionality, enhancing user privacy and security.

What sets the Kraken Wallet apart is its groundbreaking open-source nature. As the first hot wallet from a major exchange to be open-sourced, it grants developers access to its codebase. This transparency enables swift identification and resolution of bugs or vulnerabilities, fostering a collaborative ecosystem focused on continuous improvement and security enhancement.

Crypto Analysis

Bitcoin (BTC)

In the past seven days, Bitcoin has maintained a critical daily support level, striving to break free from its six-week phase of consolidation. Our previous analysis highlighted this support area, wherein despite a dip to fresh lows of $59,629 on Friday before the halving event, we managed to rebound from this level, albeit with minimal momentum, reaching a peak of $65,506. This support zone is shown by the green horizontal shading and by the blue arrows marking each swing low.

Notably, the major moving averages are once again flattening, underscoring the sideways movement, the volume on upward movements roughly equals that on downward movements, indicating a lack of clear dominance by either buyers or sellers in the market. The RSI momentum indicator resides in the middle range, suggesting that prices have room for movement in either direction. A decisive breach beneath the current support level would likely drive prices lower towards the subsequent support level of around $52,400. A break below this could see prices retrace down to the $49,000 level which marks an important point on the weekly chart on the right.

Upon scrutiny of the weekly chart, we observe that prices have effectively rebounded from the 0.382 Fibonacci level, traced from the prominent January swing low to the all-time high in March at $73,794, standing at $60,314. 

Glancing briefly at the 4-hour time frame, it becomes apparent that Bitcoin has generated a bullish RSI divergence. This is evidenced by a sequence of lower lows in price action juxtaposed with higher highs in the RSI.

The tenacity shown in bouncing back from crucial Fibonacci and price support levels, combined with previous instances of weekly pin bars, alongside bullish divergence, boosts the likelihood of a resurgence towards new highs in the medium term. The month-long sideways consolidation increasingly indicates accumulation by buyers rather than distribution by sellers. Nevertheless, as emphasised before, it's essential to avoid complacency.

TOTAL 3 (Altcoins excluding Ethereum & major stablecoins)

The Total 3 chart, which tracks the altcoin market excluding Ethereum and major stablecoins, is currently showing a less robust dynamic compared to Bitcoin. It has broken below the crucial support line, previously set at around $520 billion, and is now forming successive lower lows. This pattern suggests that the medium-term trend for these altcoins is decidedly bearish.

The price is currently below the 50-day exponential moving average (EMA), a critical indicator that many traders and investors use to gauge the daily trend's direction. In this instance, the EMA suggests a downward trajectory. Additionally, trading volume is average, and the RSI (Relative Strength Index) momentum indicator is mid-ranging, indicating that the price has the potential to move in either direction.

However, there is some potentially positive news on the horizon that could signal a bullish reversal for the altcoin market. The price has found support, as indicated by the green-shaded horizontal zone and blue arrows highlighting significant swing lows. The market has experienced several daily wicks down to this level, around $414.41 billion. If these retests of support lead to a bounce back and close above the $520 billion line, accompanied by strong green candles and an increase in volume, this could be a very positive sign for the market. At the current time of writing on early Monday, this scenario may be taking place.

This type of market behaviour is often referred to as a "fake-out," where large market players, or "whales," intentionally push the price below a key support level. This move aims to trigger short positions, allowing whales to buy in at lower prices, subsequently driving the price up into a new uptrend. In this scenario, the aim would be to return to the primary upward trend seen on a weekly chart.

Saturday's green candle was the first indicator of this bullish development. A close above the former support-turned-resistance line would enhance the likelihood of revisiting the recent highs seen in March. Although a return to these highs is not guaranteed, it is certainly becoming more plausible if this scenario were to happen.

Binance Coin (BNB)

This week, I've opted to analyse some promising price action within the top 20 altcoins, starting with Binance Coin (BNB), which currently ranks fourth in market cap at $88.5 billion. BNB appears to be in a month-long consolidation phase, trading around the $575 mark. This potential accumulation phase is visually represented by a green rectangular shaded area on the chart to the left, characterised by higher lows and lower highs. There's also a hidden bullish divergence occurring, where the RSI momentum indicator is showing lower lows while the price charts higher highs. Typically, this kind of price action would lead to a price contraction in a wedge pattern, but in this case, it's manifesting in a broad rectangular consolidation area.

The price of BNB is oscillating around the 10-day Exponential Moving Average (EMA), indicating ongoing consolidation with no clear trend direction. Support is being maintained by the 50-day EMA. On the weekly chart, BNB has encountered significant monthly resistance around the $630 level. A breakthrough past this resistance could potentially set the stage for higher prices.

Given the current consolidation on the daily chart, BNB might be gearing up for another push towards its previous highs. However, initiating a position in the middle of a consolidation phase isn't generally the most advantageous entry point. More favourable entry opportunities might present themselves either with another dip to the lower bounds of the consolidation zone or a breakout and subsequent retest of the upper boundary, which would then serve as new support.

TONCOIN (TON)

For my final chart analysis this week, let's examine Toncoin, currently ranked number 10 in market capitalisation with a valuation of $6.10. The price movement of Toncoin is depicted within a parallel trend channel on the chart provided. Notably, the price is presently at the lower boundary of this channel, suggesting a potential bounce back and continuation of its upward trend towards the channel's upper limit.

Importantly, the price remains well above the upward-sloping 50-day exponential moving average (EMA), a positive signal of sustained upward momentum. Additionally, a hidden bullish divergence has been identified by the RSI momentum indicator at the bottom of the chart, further reinforcing the potential for upward movement. This setup often signals that the downtrend in momentum is slowing and could reverse, indicating a strong likelihood that the price could resume its ascent along the established uptrend.

In Summary

In a week marked by global turbulence, Bitcoin has exhibited remarkable resilience, maintaining its price through a phase of sideways consolidation. While the blue-chip altcoins appear weak, with the Total 3 chart showing a concerning downtrend, there have been instances of positive price action, as highlighted in our analysis of two specific assets.

Cryptocurrencies are known for their rapid movements, and if Bitcoin can achieve new all-time highs soon—history suggesting this is possible—the outlook could brighten significantly for altcoins. Such a milestone could trigger a new wave of bullish momentum across the altcoin market.

Many altcoins often follow Bitcoin's lead, drawing strength from its performance. Given Bitcoin’s ability to maintain its primary uptrend, there's always potential for a sudden and robust turnaround in the altcoin markets, a phenomenon we've witnessed several times before.

As we look to the week ahead, I remain optimistic about the opportunities in the cryptocurrency markets. May everyone have a productive and prosperous week.

Macro News & Analysis

Last week saw the biggest drop in the US benchmark index since March 2023. Weekend price action in bitcoin and crypto was positive. Asian equities closed higher Monday and early European trading, along with US futures look promising for the bearish sentiment to have turned. This of course likely has been helped by easing Middle East tensions and earnings season picking up the pace this week. Oil and gold are down and the dollar is flat after a 3.3% rise in DXY since 11th March.

US Wrecking Ball Could Be Taking A Break

Since the US 10 year yield broke out from its 4.3% resistance level at the start of April, it’s gained over 0.3% to around 4.65% today and peaked last week at almost 4.7%. That sharp rise in the global benchmark 10 year rate has not only had an effect on US risk assets but has put pressure on markets around the world with the S&P 500 down -3.05%, Japan’s Nikkei down -4.54% and Germany’s DAX down over -1%. The FTSE 100 saw an intraday low on Friday of -2.25% from the previous week’s close, although by Friday that had been completely regained to close the week down just -0.04%.

So far today however, things are looking strong. The FTSE is up over 1%, DAX is up 0.5% and the Nikkei closed Monday at +1%. China’s Hang Seng Index closed up +1.77% and South Korea’s KOSPI closed +1.45%. Asian currencies along with the British pound have weakened from Friday’s close, but bucking the trend is the euro which is currently flat vs Friday.

Most notable amongst currencies is the US dollar against the Japanese yen which is persistently pushing up against a staggering 155 yen to the dollar and looks primed to weaken even further:

Latin America has been suffering as well, with the Brazilian real and Mexican peso falling sharply:

I do wonder if, following the IMF annual conference in Washington last week will result in the dollar backing off, as central bankers from around the world expressed the stress their currencies and economies are feeling thanks to the strengthening dollar.

BOE & ECB Look Set To Cut Rates Before Fed

ECB chair Christine Lagarde and BOE chair Andrew Bailey both hinted at cuts in June at the IMF meeting in Washington on Friday. Bailey said that UK inflation has fallen inline with the Eurozone so a cut in June is looking likely.

Rates markets have other ideas though, with traders pricing BOE cuts inline with the Fed:

This divergence has economists scratching their heads as the data doesn’t indicate a need for the BOE to keep rates at their current level, particularly as the UK real rate (nominal rate less inflation) is now higher than the US real rate.

Both the EU and UK central banks will face tough decisions in the coming months and quarters though, if US inflation remains stickier and the Fed continues to delay cutting, as the rising rate differential will weaken the euro and pound even further. The euro has fallen nearly -3.5% since early March and the pound has fallen -4.27% over the same period. EUR/USD is currently 1.06, down from a high of 1.098 in March and GBP/USD is at 1.234, down from 1.289 in March.

Earnings Season Should be Good for Bitcoin Miners and Coinbase

Q1 has been a great period for bitcoin, having closed the quarter up +67.5% and having gained a staggering +91.65% from January’s low of $42,558 to March’s high of $71,285. The US spot bitcoin ETFs, which went live on January 10th, have seen net inflow of 835 thousand bitcoins, or $12.3 billion dollars.

With bitcoin’s performance since the introduction of US spot bitcoin ETFs in the US, excitement around Bitcoin’s 4th halving which happened over the weekend, bitcoin mining stocks and MicroStrategy look set to impress now we’re entering earnings season. We’ve also seen a persistent meme coin season throughout Q1 this year, which could mean Coinbase is set to smash any Wall St estimates.

Whilst some outliers on Wall St have cottoned onto what bitcoin is, and an even smaller minority have some idea of what Coinbase’s business model means, I think the vast majority of traders and more to the point, analysts who set earnings targets, have no idea what they’re about to experience. Of course I could be way off, but with bitcoin’s price currently above $66,000, both MicroStrategy and any miners holding onto their bitcoin have strong valuations. Some miners, although we’ve seen a pick up in price over the last few trading days, still currently sit well below book value when looking at price to assets ratios.

There are some real discounts available in this space at the moment. I suspect over the coming quarters, as the bull market plays out, we could see Wall St waking up to the significance bitcoin and crypto on publicly traded companies like Coinbase, MicroStrategy and bitcoin miners. Not only that but many of the miners are also give exposure to green energy and AI data centre sectors.

Here’s a table with some of the big, and not so big hitters’ earnings dates:

For full transparency, I am invested in some of these stocks. You can see my portfolio here.

The Week Ahead

It’s a busy week for earnings and we have the Fed’s preferred inflation measure, core PCE, on Friday. No Fed speakers this week (phew!) as it’s the FOMC blackout period ahead of the US rate decision on 1st May.

As discussed above, I think we could see a bounce across equities and bitcoin this week, although we do have a potentially significant headwind. The US Treasury are selling $183 billion of notes at auction this week which, depending on how earnings go, could be enough to curtail any bullish sentiment. We’re also in the US equity buybacks blackout period during earnings season, so that’s another element of weakness to keep in mind.

Overall, I do believe this to be a healthy correction during a bull market and so far, the S&P is only down -5.9% since its all time high in March and currently just above its 100 day moving average. A test of the previous all time high from January 2022 wouldn’t even be a -9% correction and would also line up with the 200 day MA. That to me would be bullish – the deeper the correction, the stronger the ensuing trend continuation. As Joseph Wang has been saying: #crashup!

Economic Calendar

Monday

  • China 1yr, 5yr prime loan rates

  • Turkey consumer confidence

  • Eurozone budget to GDP, debt to GDP, consumer confidence

  • UK CBI business optimism index, CBI industrial trends orders

  • Canada new house prices

  • US Chicago Fed national activity index

  • Philippines & US military annual war games begin near Taiwan and South China Sea

  • ECB President Christine Lagarde speaks

Tuesday

  • Australia PMI

  • India HSBC PMI

  • US S&P Global Manufacturing PMI, S&P Global Services PMI, new home sales, building permits, Richmond Fed manufacturing & services indices

  • US 2 year note auction

  • UK S&P Global, CIPS Manufacturing PMI

  • South Korea consumer confidence

  • BOE Pill speech

Wednesday

  • Australia CPI

  • Turkey business confidence

  • Indonesia rate decision

  • Germany IFO business climate

  • Italy business confidence, consumer confidence

  • Canada retail sales, BOC summary of deliberations

  • US durable goods orders

  • US 5 year note auction

  • South Korea business confidence

  • ECB McCaul, Schnabel speak

Thursday

  • Malaysia CPI

  • South Korea GDP

  • Germany GfK consumer confidence

  • France business confidence

  • Turkey rate decision

  • US GDP, retail inventories, wholesale inventories, initial jobless claims, pending home sales

  • US 7 year note auction

  • ECB Schnabel speech

Friday

  • Japan rate decision, Tokyo CPI, inflation and GDP forecasts

  • UK GfK consumer confidence

  • Australia PPI

  • France consumer confidence

  • US core PCE, personal income and spending, University of Michigan consumer sentiment

  • ECB Guindos speech

Earnings Calendar

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