28 April 2023

The newsletter is put together by Giottus Crypto Platform and The News Minute’s Brand Studio. You can read all the previous issues of Cryptogram

here

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Hello,

That pretty much sums up the past week, yeah? It’s a good sign, though. The profit bookers have made some money, and the market will now look to solid signals to make the next move. Things are looking better as BTC hovers back near the 30K levels now. What we have to start planning for now is Bitcoin Halving – and that’s what our main piece today is about. With that, the top 5 stories for this issue.

1

Ethereum’s next upgrade will be known as

Cancun-Deneb (“Dencun”) and will focus on a proto-danksharding

, the nickname for Ethereum Improvement Proposal (EIP) 4844, which is crucial to for rollups to start working better on the network.

2

Yuga Labs, the creator of the Bored Ape Yacht Club,

continues to dominate the NFT market

, accounting for a nearly 35% share of all NFT trading volume over the six-month period from October 2022 through March 2023.

3

Coindesk has launched the

Bitcoin Trend Indicator

. If you are playing the markets on a daily basis, this is a useful tool for you.

4

Phantom, one of the go-to crypto wallets for Solana blockchain users, will

start supporting the Ethereum and Polygon blockchains

in a public launch across browsers, iOS and Android from May 1st.

5

Ethereum staking has peaked to record-breaking levels following the Shanghai upgrade, with weekly inflow of deposits for staking last week crossing 500k ETH, mainly driven by institutional staking service providers and investors reinvesting rewards after withdrawal.

WEEKLY MACROS

Total crypto market cap - $1.24 trillion -

0.1%

Bitcoin market cap - $570.8 billion -

4%

The dollar index (DXY) - 101.4 -

0.2%

Bitcoin Dominance - 44.85% -

10%

Crypto Fear and Greed Index

- 59 - the market is in greedy condition

WEEKLY PRICE TRACKER

Price movements from last Friday

BTC Watch

1.63% in 24 hrs and 3.93% in 7 days due to short positions getting liquidated, exhibiting thin order books. Also, there are rumours flying about US government offloading coins from now defunct crypto exchange Mt. Gox.

ETH Watch

0.11% in 24hrs and down by 2.20% in 7 days as the staking landscape evolves and positive sentiment from Phantom wallet’s multichain support for Ethereum.

Altcoins Watch

MATIC

:

0.20% in 24hrs and down by 4.48% in 7 days as market reacts to yesterday’s news of Google Cloud partnership with Polygon labs to build Blockchain Node Engine.

SOL

:

2.72% in 24 hrs and 0.06% in 7 days due to its growing sales volume, unique buyers and unique sellers over the past seven days.

BNB

1.71% in 24 hrs and up by 2.25 % in 7 days as market shows mixed reaction over Binance’s efforts to life restrictions for Russian users and their move to pull out from the Voyager deal citing regulatory uncertainty.

WHAT'S HOT

Coin to watch out for

Conflux (CFX)

- is an EVM-compatible Layer-1, known for being the only regulatory-compliant permissionless blockchain in China. Conflux’s token economy is built around the $CFX token, a unit of value on the platform that enables token holders to pay transaction fees, earn rewards through staking, rent storage, and participate in network governance. With China banning Crypto, Asian investors are looking for an alternative bet like CFX which places it in an interesting spot with Hong Kong enforcing crypto regulations comparable to traditional finance in the month of June.

Project to watch out for

Bitcoin (BTC)

- If you are a fan of this newsletter, then you must have read countless narratives about countless crypto assets. Given numerous blows to crypto market, BTC continues to spearhead the crypto market by its price movements. DCA'ing into BTC over prolonged periods (at least 3-5 years) with conviction has reaped moderate ROI higher than any traditional asset. Any new market entrant has a better chance of achieving better guaranteed returns than investing into moonshot projects.

Arbitrum (ARB)

- has a suite of layer-2 scaling solutions that provides faster speeds at a significantly lower cost, with the same level of security as Ethereum. Aided by Arbitrum's foundation airdrop, the network experienced heightened levels of activity in terms of transactions. Arbitrum recently airdropped $120 million to DAOs which could signal a rally for $ARB token and tokens associated with the Arbitrum ecosystem.

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THE HOT TAKE

How the Bitcoin halving may impact BTC price

Quick brief: Bitcoin halvings are a rare but key event in the crypto space. It reduces new supply of BTC thereby inducing a market demand that reflects in a strong upward price action. Already, talks of the next halving in April 2024 are gathering stream as crypto investors prepare for this eventuality with much to cheer. Given this context, we analyse the previous halvings and identify the right time for long term investors to enter/exit the market. Refresher: What is Bitcoin halving?Bitcoin halving takes place when 210,000 “blocks” added to the blockchain from the previous one (roughly every four years). The event cuts the rewards to miners by half. Currently Bitcoin miners receive 6.25 BTC for each block they successfully mine. Halvings will occur until around the year 2140, when all 21 million coins are fully mined. The next halving is slated to happen around April 2024 post which the miners will receive 3.25 BTC per block.Let us analyse key trends leading into April 2024:

1. 2020 is a good indicator of 2024 and beyond

Price naturally increases a) in anticipation of the halving and b) post the halving when market demand likely exceeds new supply.The first two halvings (2012 and 2016) were muted as BTC was still in the periphery in terms of adoption. But price appreciated gradually in the year leading into the event and significantly post the halving.

Source: Coindesk

The 2020 halving is likely to be an indicator of how things can pan out in 2024.Price remained flat leading into the 2020 halving

Source: IntoTheBlock

During the third halving, the prices were relatively flat prior to the event, excluding the exogenous shock of the March COVID-driven sell-off, and then reached an all-time high of $69,000 nearly 18 months after in November 2021.

2. BTC dominance is likely to increase strongly in the next 12 months

During 2020 halving, BTC’s dominance hovered around 65% having gained from below 50% in the previous year. It remained in an uptrend for the next 6 months post the halving before altseason took over in early 2021. Bitcoin’s dominance currently sits at 48%.

BTC dominance increases before an halving and reduces post the event

Source: Trading View

3. Bitcoin halving has never occurred during a potential recession

Given Bitcoin was conceptualized post 2008, it has never seen a global recession. The chances of one in 2023 continue to be solid. If it happens, we anticipate that the behaviour of BTC’s price will be similar to 2020 but at a lower scale or with a delay of a few months.

During the 2020 halving, the event happened amidst the coronavirus pandemic though it did not deter the growth of BTC adoption. According to

beincrypto

, the volume of Bitcoin traded and exchanged in early 2020 was 2,800% higher than that seen in 2016.

What should you, the investor, do now?

1. Understand the market conditions and invest in BTC:

Bitcoin may appeal as an attractive investment option in the short term and can reach a new all-time high after its halving though it is unlikely to see the same growth as previous cycles due to increased market size and competition from other digital assets including ETH. Analysts believe that the next halving is already 50% priced in and BTC has the potential to reach $40-50,000 by April 2024. Also, the interest from institutional players in Bitcoin as a hedge against inflation and macroeconomic uncertainties has grown leap and bounds. However, a recession can temper the growth leading into the halving while its growth after can still be considerable. A

by popular account PlanB summarizes the strategy well –

buy BTC 6 months before the halving (Nov. 2023) and hold for 2 years hence

.

2. Hold for the long term:

The cryptocurrency market is known for its volatility, and short-term gains can quickly turn into losses. By holding onto your BTC investments for the long term, you may be able to ride out market fluctuations and potentially see greater returns over time.

3. Diversify your portfolio 6-12 months post the halving:

The halving event will see an increase in BTC dominance leading into it. That means altcoins will underperform BTC in this period. 6 months post the halving may be a right time to convert some of your BTC stack into ETH and other top altcoins for a considerable gain as BTC dominance can drop.

That’s it for this issue, see you next week.

If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.

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