Bitcoin Update
Bitcoin halving events have had a significant impact on many elements of the ecosystem.
Halvings occur about every four years, they cut the incentive miners earn for validating transactions in half.
Bitcoin halvings have had a considerable impact on onchain volume and transactional costs and recent developments particularly the rise of Exchange-Traded Funds (ETFs) have shaped these dynamics even more.
Bitcoin ETFs and Bitcoin mining companies listed in the USA:
| Category | Name | Ticker Symbol | Description |
|---|---|---|---|
| Bitcoin ETFs | Grayscale Bitcoin Trust | GBTC | One of the most well-known Bitcoin investment trusts. |
| Purpose Bitcoin ETF | BTCC | The first Bitcoin ETF in North America, listed on the TSX but available to US investors through ADRs. | |
| ProShares Bitcoin Strategy ETF | BITO | Provides exposure to Bitcoin futures contracts. | |
| Valkyrie Bitcoin Strategy ETF | BTF | Invests in Bitcoin futures contracts, similar to BITO. | |
| Invesco Galaxy Bitcoin Strategy ETF | BTCN | Focuses on Bitcoin futures, offering another option for futures-based Bitcoin exposure. | |
| Bitcoin Miners | Riot Platforms, Inc. | RIOT | A major Bitcoin mining company based in the USA. |
| Marathon Digital Holdings, Inc. | MARA | One of the largest Bitcoin miners in North America. | |
| Bitfarms Ltd. | BITF | Operates Bitcoin mining farms and focuses on scaling operations. | |
| Hive Blockchain Technologies Ltd. | HIVE | Engages in cryptocurrency mining and has a focus on Bitcoin. | |
| Argo Blockchain plc | ARBK | A UK-based miner with operations in North America, focusing on Bitcoin mining. |
Goldman Sachs
Goldman Sachs has been optimistic about Bitcoin’s long-term potential. They have suggested that Bitcoin could reach as high as $100,000 in the coming years if institutional adoption continues to grow. Their analysis indicates that Bitcoin could become a significant asset class, potentially attracting more mainstream investment.
JP Morgan
JP Morgan has been cautious but somewhat positive about Bitcoin’s future. They have projected that Bitcoin could eventually reach $70,000 if it maintains its current trajectory. However, they also warn of potential volatility and regulatory challenges that could impact its price stability.
Bank of America
Bank of America has highlighted Bitcoin as a major innovation but remains cautious about its short-term prospects. They see potential for Bitcoin to gain mainstream acceptance but predict significant fluctuations in its value. Their predictions generally suggest that Bitcoin could experience substantial volatility before achieving sustained growth.
Wells Fargo
Wells Fargo has taken a more conservative approach, expressing skepticism about Bitcoin’s long-term value. They predict that Bitcoin might face considerable hurdles, including regulatory scrutiny and technological challenges, which could affect its growth. Their outlook is generally more cautious compared to other major banks.
Citibank
Citibank has been relatively bullish on Bitcoin, suggesting that it could potentially reach $300,000 in the next few years. They argue that Bitcoin has the potential to become a major global reserve asset, though they also acknowledge significant risks and uncertainties associated with this prediction.
HSBC
HSBC has been skeptical about Bitcoin as a viable long-term investment. They view Bitcoin primarily as a speculative asset rather than a stable investment. Their predictions generally lean towards caution, highlighting concerns about Bitcoin’s volatility and its suitability as a long-term asset.
Deutsche Bank
Deutsche Bank has offered a mixed view, recognizing Bitcoin’s potential as an innovative financial asset but also emphasizing the risks involved. Their predictions suggest that while Bitcoin could see significant growth, it will likely be accompanied by high volatility and regulatory challenges.
Understanding Bitcoin halving
The Bitcoin halving is a pre-programmed occurrence that occurs every 210,000 blocks, or approximately every four years. During a halving, the reward for mining a block is reduced by half, slowing the rate at which new bitcoins are created and thereby diminishing the available supply. This process is important to Bitcoin’s monetary policy and has a significant impact on its long-term value proposition.
Impact on Chain Volume
Onchain volume is the total quantity of Bitcoin moved through the chain. As of present, the daily onchain volume is around 300,000 $BTC indicating a stable and active network.
Impact on Transactional Costs
The demand for block space on the Bitcoin network influences transaction charges, often known as fees. The current average transaction cost is about $2.50 per transaction. .
The role of exchange-traded funds (ETFs)
The launch and increasing popularity of Bitcoin ETFs has complicated the dynamics of Bitcoin’s on-chain activity and transaction costs. ETFs allow institutional and ordinary investors to obtain exposure to Bitcoin without actually holding the cryptocurrency. Their impact includes:
Increased Institutional Participation: ETFs have enabled greater institutional investment in the Bitcoin market. This flood of institutional wealth may increase demand, affecting both on-chain volume and transaction fees.
ETFs have helped to increase market liquidity by making it easier to invest. Higher liquidity can result in more stable on-chain transaction costs while also increasing transaction volume.
Price Influence: The introduction of ETFs frequently causes higher volatility and price swings in the Bitcoin market. These variations might have an indirect impact on on-chain volume and transactional costs because market players react to price changes.
Technically, Bitcoin is currently positioned above its 50-day and 200-day moving averages, indicating a bullish trend. The Relative Strength Index (RSI) is hovering around 70, suggesting that Bitcoin might be nearing an overbought condition, which could signal a potential short-term correction. Additionally, the current price has broken through key resistance levels, reinforcing a strong upward trajectory. However, with increased volatility and the potential for price swings, market participants should closely monitor support levels and overall market conditions to gauge future movements.
Bitcoin’s halving occurrences have continuously altered on-chain volume and transaction fees, owing to shifts in supply dynamics and market behavior. The rise of Bitcoin ETFs has amplified these effects by increasing market participation and liquidity. As Bitcoin evolves, recognizing these elements will be critical for navigating its complicated financial landscape.
Shayne Heffernan
