After the last halving, the market for digital assets and Bitcoin in particular took some time (five to eight months) before the positive effects of this became visible in the price trend. However, this cycle could be different, as institutional investors are entering the market with high volumes and have already done so. This could make for a shorter-lived cycle, which at the same time does not include the volatile downward phases (up to 70%).
Thought of the week
Digital Asset News
Bitcoin has successfully completed its fourth halving after the leading cryptocurrency processed its 840,000th block on Friday night, which also marked the point at which mining rewards were halved again.
Since Friday, Bitcoin miners have received 3.125 BTC per block mined, compared to 6.25 BTC for four years previously.
Halving is a programmed process in the Bitcoin protocol that takes place regularly after 210,000 blocks have been mined, which is roughly every four years.
Accordingly, the last three “halvings” took place in 2012, 2016 and 2020, which led to a significant decrease in mining rewards over time. The first Bitcoin halving took place in 2012, when the reward for mining a block was reduced from 50 to 25 BTC.
The main purpose of halving is to create scarcity and prevent an inflationary oversupply of Bitcoin. The mechanism was built into the code by Bitcoin creator Satoshi Nakamoto from the beginning.
By halving the mining rewards, this process effectively slows down the rate of increase in the supply of Bitcoin.
This process will continue until around 2140, when all possible Bitcoin has been mined.
Major Bitcoin miners have been preparing in advance for this important event. Marathon Digital announced plans to build a 200-megawatt mining facility in Texas for $87.3 million.
Karim Chaib, CEO of the crypto platform Dopamine App, confirms halving as the key mechanism for Bitcoin’s scarcity and market valuation.
Chaib told Cointelegraph: “Scarcity is a fundamental economic principle that affects the value of an asset. By programmatically ensuring that the supply of Bitcoin increases more slowly over time, halvings guarantee the scarcity of Bitcoin.”
The hard-coded scarcity sets Bitcoin apart from traditional stores of value, as Chaib points out to Cointelegraph: “This programmed scarcity is a key feature that differentiates Bitcoin from traditional assets like gold, which can become less scarce as new means of extraction and production are developed. Bitcoin, on the other hand, has a limited supply of 21 million currency units, which makes it fundamentally inflation-proof.”
Bitcoin’s economic design and halving mechanism are effective ways to make Bitcoin a deflationary asset, making it the first reliable alternative to gold, according to Jonas Simanavicius, co-founder and CTO at Syntrop: “Gold has served as the primary store of value for thousands of years because it is difficult to increase the supply and it is global… Nothing else has even come close to a predictably slow-growing supply – until Bitcoin.”
The US Securities and Exchange Commission (SEC) has amended its complaint against Tron founder Justin Sun, alleging that he travelled “extensively” throughout the US – giving the agency jurisdiction over his case.
The regulator argues that it has “personal jurisdiction” over Sun, Tron and two other companies controlled by him because they “purposefully engaged in acts in and directed at the United States”, as the agency wrote in the amended complaint filed in Manhattan federal court on 17 April.
Sun spent a total of more than 380 days in the US between 2017 and 2019 on business trips to New York City, Boston and San Francisco, the SEC said.
It alleges that the trips were made on behalf of the Tron Foundation, the BitTorrent Foundation and Rainberry – all of which are named in the complaint as Sun’s companies.
The SEC also reiterated allegations from its original complaint last month that Sun and its companies sold unregistered securities through the Tron (TRX) and BitTorrent (BTT) tokens and that Sun engaged in “manipulative wash trading”.
The SEC also emphasised in this context that, in its view, TRX and BTT were specifically advertised, offered and sold to “consumers and investors in the United States”.
The SEC thus confirms the aggressive course taken to “retain” the competences.
Digital Asset Market
Market report including trading idea
The majority of digital assets did not experience any major price changes last week, but the market was able to free itself from the pre-halving dip, establish support zones and turn into positive trends after the halving.
The well-known and historically very market-relevant event of the Bitcoin halving took place on Friday evening Central European Time. This reduced the new supply coming onto the market to 3,125 Bitcoin per block, which could lead to further shortages in the future. In anticipation of this, the market experienced a quiet trading week, but has become more volatile and positive since the halving. The majority of market participants took the halving as a buying opportunity and the global financial markets also provided a tailwind for further trend establishment on Monday morning.
Over the week as a whole, the market is up by around 0.6%.
The message for the coming week is: If the positive sentiment continues and there is increased spot buying volume, the market could make a bigger leap.
Chart technology
From a technical chart perspective, Bitcoin remains in a larger trend channel between $60,000 and $70,000, but this could be broken upwards in the coming week if the positive trend continues.
Altcoins often offer temporarily more lucrative entries after the halving, as a rotation of capital could take place as market participants favour these more speculative assets after a media cool-down in Bitcoin.
A consolidation of Bitcoin would be “healthier” for the long-term market development.
The next price targets in the event of a positive development: ~$68,500, ~$70,000, ~$72,000
The next price targets in the event of a negative trend: ~$64,500, ~$62,000 ~$60,000
Trading idea
Bitcoin offered good entry points around the halving, with further positivity further entries could be lucrative, but well-known / established altcoins could be more interesting, as these are often more volatile in performance than Bitcoin.
Weekly overview
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