Crypto News – Bitcoin Halving 2024: Could Crypto Market Just Get Hyped For Halving

Bitcoin Halving 2024: Could Crypto Market Just Get Hyped For Halving

Crypto News – The Hype and Speculation Surrounding the Bitcoin Halving 2024

Crypto News – The Bitcoin halving, expected around April 19, 2024, is more than just a recurring event; it’s a built-in mechanism designed to impact the cryptocurrency’s supply and ultimately its price. Every four years (roughly 210,000 blocks), the reward miners receive for successfully validating a block on the Bitcoin blockchain is slashed in half.

Bitcoin’s hard cap of 21 million coins underpins its potential as a hedge against inflation. The halving directly reinforces that scarcity factor. While it takes into account the growing adoption of Bitcoin over time, it deliberately slows the issuance of new coins. This dynamic, in a market subject to supply and demand, has historically played a role in pushing Bitcoin’s value upward.

It’s Important To Look At The Numbers Surrounding Past Halvings:

Nov. 28, 2012: Price rose 8,447% in the year after, as rewards dropped from 50 BTC to 25 BTC per block.

July 9, 2016: Price increased 283% in the following year, as rewards fell to 12.5 BTC per block.

May 11, 2020: Price surged 527% in the following year, as rewards were cut to 6.25 BTC per block.


While these figures are impressive, market cycles are never identical. 2024 could unfold very differently, influenced by factors such as macroeconomic conditions or geopolitical events.

Bitcoin History Informs, But Doesn’t Dictate

Here’s why this halving could have a unique and lasting impact:

The Wall Street Factor Major financial institutions are overcoming their early skepticism. A recent Glassnode report highlights a 13.4% increase in Bitcoin holdings by large entities between 2020 and 2021. This deep-pocketed interest, with a focus on long-term potential, could smooth out volatile swings typically seen after a halving.

Regulation Builds Trust: Clearer guidelines in jurisdictions like Singapore reduce investor anxiety. This matters because it attracts a wider audience: funds, asset managers, and others seeking compliant entry points into crypto.

Bridges, Not Islands: Expect the growth of platforms offering seamless integration of crypto holdings alongside traditional assets. Investors won’t have to choose between worlds – portfolio diversification becomes more attainable.

Key Takeaway: The 2024 halving serves as a spotlight on Bitcoin’s evolution. While price gains aren’t guaranteed,  the confluence of greater institutional participation, a stabilizing regulatory landscape, and increasingly accessible platforms points to a maturing market – one that could solidify crypto’s place within mainstream finance.

Explained Bitcoin Halving: Why This Time, It Could Be Fundamentally Different 

The Bitcoin halving, a cornerstone of its design, has a history of sparking price rallies as miners see their rewards slashed.  While pre-halving surges have been less dramatic lately, the 2024 event stands apart due to seismic shifts in the market:

The ETF Factor: Demand vs. Supply Squeeze

Spot Bitcoin ETFs unleashed a torrent of institutional money.  Right now, around 900 new Bitcoins are mined per day (roughly $54 million worth).  That drops by half after the halving.  Yet in February alone, US-listed ETFs saw average daily inflows of $208 million – a clear mismatch that exerts significant upward pressure on price.

Derivatives: The Game Changer Nobody Saw Coming

A robust, regulated derivatives market isn’t just about fancy financial trading. It fundamentally alters the halving equation for several reasons:

Miners Get a Safety Net: Options and futures let miners hedge against post-halving revenue dips, removing pressure to dump fresh-mined Bitcoin. This could limit the supply shock that historically weighed on price.

The Wisdom of Crowds: Derivatives provide a gauge of investor sentiment, offering data-driven insights that influence the broader market. This can foster more rational decision-making, potentially stabilizing Bitcoin’s notorious volatility.

Where the Institutions Dip Their Toes: Big players prefer markets with liquidity. The derivatives boom attracts more traditional investors, in turn making Bitcoin more liquid and easier for others to buy/sell.

Bitcoin Miners: Adapt or Die

The Great Sell-off: Shrunken Bitcoin reserves suggest miners are cashing out ahead of the halving or using holdings to upgrade facilities in a race for efficiency.

Hash Rate Wars: Competition is at an all-time high, squeezing margins for small-scale miners. Expect consolidation at best, bankruptcies at worst, as only the most efficient survive.

The Ordinals Lifeline: These “Bitcoin NFTs” have sparked an on-chain activity surge. The resulting fees are a potential lifeline for miners, offsetting dwindling block rewards. It’s a reminder that innovation begets new revenue streams.

Beyond the Hype: Macroeconomic Forces

Bitcoin, despite its “digital gold” narrative, doesn’t exist in a vacuum. Here’s where the ‘big picture’ intersects with the halving story:

Central Banks in the Spotlight: If interest rate hikes persist, or even quantitative easing returns, investors worried about currency devaluation will look to hedges. Bitcoin’s programmed scarcity becomes even more appealing.

Geopolitics Matter: Rising tensions, sanctions, and trade wars create instability. This can drive interest in assets perceived as outside the control of traditional governments – like Bitcoin.

The 2024 Halving Is Just At The Corner: It’s About More Than Price

Key Takeaways: 

Yes, the halving could trigger a rally. But 2024 is about maturation, not speculation. Spot ETFs, regulated derivatives, and the potential influence of central banks aren’t just trends – they’re the foundation of a market where Bitcoin has the potential to move beyond niche status, becoming a legitimate part of diversified portfolios.

Riot Platforms has been actively expanding its mining capabilities, recently acquiring a substantial number of MicroBT machines. In December, the company purchased 66,560 machines for $290.5 million, and in February, they acquired an additional 31,500 miners. As stated in a recent news release, Riot intends to deploy these miners throughout 2024 and 2025, aiming to increase its self-mining hash rate capacity to 41 EH/s. They are also continuing to develop their facility in Navarro County, TX.

Regarding their post-halving strategy, a Riot spokesperson mentioned, “We are now looking beyond halving and expect to be highly active over the coming months given that we have the balance sheet and capital tools to make us one of the most aggressive acquirers in the industry.”

CleanSpark, another player in the mining sector, has voiced its intentions to actively participate in the post-halving M&A market. The Las Vegas-based company recently made strategic acquisitions, including three facilities in Mississippi for $19.8 million. With a significant cash reserve of about $300 million and holding 5,021 BTC, valued at approximately $310 million, CleanSpark’s CEO Zach Bradford stated, “We are now looking beyond halving and expect to be highly active over the coming months given that we have the balance sheet and capital tools to make us one of the most aggressive acquirers in the industry.”

Core Scientific, having emerged from bankruptcy earlier this year, is taking a calculated approach to infrastructure growth through M&A activities. CEO Adam Sullivan emphasized their pragmatic approach, stating, “We’re going to be much more opportunistic on the machine purchase side…in not only 2024, but 2025, because our opportunity to grow our exahash is really within our existing facility base.”

Hut 8 is also actively engaged in the M&A market, with CEO Asher Genoot expressing their strategic approach, “We’re very active in the M&A markets, but we’re also very cost-conscious. We’re not going to overpay because we know what the cost is to develop ourselves as well, so we’re running both in parallel very aggressively.”

Post-halving, potential sellers in the crypto mining sector are making strategic moves, signaling shifts in focus and opportunities for consolidation.

Applied Digital recently sold its Garden City, TX facility to Marathon for $97.3 million, showcasing a shift towards high-performance computing data centers. The company’s plans regarding further asset sales post-halving remain undisclosed.

Greenidge Generation, another pre-halving seller, sold land and mining capabilities to NYDIG, reducing its debt by approximately $85 million in 2023. CEO Jordan Kovler mentioned potential acquisitions post-halving, stating, “We continue to evaluate potential M&A and partnership opportunities.”

Stronghold Digital, facing debt challenges, may benefit from selling its infrastructure, according to Compass Point Research & Trading analyst Joe Flynn. Stronghold CEO Greg Beard expressed openness to attractive M&A deals.

Argo Blockchain avoided bankruptcy and reduced debt through strategic asset sales, such as the Mirabel, Quebec facility. Elliot Chun from Architect Partners anticipates significant mining-related M&A in the latter half of 2024, with well-capitalized miners likely acquiring smaller players.

Galaxy analysts suggest that better-capitalized miners are poised to acquire smaller ones, especially those with vertical integration or low valuations. CleanSpark’s Matthew Schultz highlighted ongoing discussions among public mining companies regarding potential consolidation.

How Bitcoin Halving Could Impact Struggling Mining Stocks

Crypto analysts observe that mining stocks have typically lagged behind Bitcoin’s performance before halving events but have surged afterward. Despite a downturn in many mining stocks this year, experts anticipate a rebound in investor interest, especially in the strongest mining companies, once the dust settles after the Bitcoin halving.

Some of the world’s largest publicly traded mining firms have witnessed sharp declines in their stock prices in recent months.

Marathon Digital, a mining giant, has seen its stock drop by approximately 33% since the beginning of this year.

Meanwhile, competitors like Hut 8 and Riot Platforms have experienced slightly more significant declines, with their stocks down by about 35% and 46%, respectively, during the same period. Core Scientific, after emerging from bankruptcy in January, has also seen a 16% decrease in its stock price.

In contrast, CleanSpark, based in Las Vegas, has defied the trend, enjoying a 55% increase in its stock price in 2024.

These widespread declines in mining stocks are occurring as investors evaluate which miners will be best positioned post-halving, considering the reduced block rewards of 6.25 BTC to 3.125 BTC and its potential impact on miner profitability.

David Kroger, a data scientist at StoneX Digital, notes that Bitcoin halving events, happening every four years, often lead to speculative bubbles that peak about a year after each cycle.

Investors may have adjusted their expectations and positions based on historical market trends surrounding halving events, including significant price fluctuations and market sentiment shifts,

Kroger

Furthermore, since January 11, when the Securities and Exchange Commission approved the first US spot bitcoin ETFs, capital allocators have had a new avenue to access BTC.

Sue Ennis, head of investor relations at Hut 8, mentioned during a recent X space session, “You now have a situation where there is an option to get commodity exposure as an institutional investor with the spot bitcoin ETF that mitigates the company risk that you take on when you invest in a bitcoin miner.”

Despite a recent slowdown in demand for US spot bitcoin ETFs, these funds have attracted around $12.5 billion in net inflows in just over three months since their introduction to the market.

Halving 2024 Explained: Why Miner Stocks Might Lag Bitcoin’s Recovery

The Bitcoin halving could put severe pressure on mining stocks in the short term. Analysts at Compass Point Research & Trading point to historical patterns where miners underperformed Bitcoin leading into the halving, then outperformed  afterwards. But this halving is different…

The ETF Factor Changes the Game: With spot Bitcoin ETFs now a reality, miners aren’t being driven solely by Bitcoin price action. Instead,  hash price – a metric tied to network difficulty, transaction fees, and BTC value – has become a key driver. Any sustained hash price rebound post-halving would fuel a wave of buying in the mining sector.

The Post-Halving Effect: What To Expect

Consolidation Phase: Expect BTC prices to stabilize before a sustained uptrend resumes, likely in the latter half of 2024 and into 2025. This means miners won’t see an immediate price-driven bounce.

Big BTC Holdings = Potential Upside: Miners like Marathon (17,381 BTC), Hut 8 (9,102 BTC), and Riot (8,490 BTC) stand to benefit from any post-halving BTC surge, but this comes with a caveat – their stock performance will be less reactive to short-term BTC gains. Investors, especially institutions, will be looking for a broader picture of long-term stability.

Fundamentals Become King: The post-halving environment will force investors to focus on the nitty-gritty: EBITDA, free cash flow, and the ability to maintain low power costs amidst
reduced block rewards.

Crypto Market’s Valuation Struggle: It’s Not Just About Bitcoin Price

Industry executives believe the current market isn’t fully appreciating diversified business models. Hut 8’s CEO, for example, believes their high-performance computing  and managed services arms are being discounted.  This suggests two things:

Investor Education Lag: The market may still be catching up to the fact that miners aren’t just a ‘proxy play’ on Bitcoin itself. This creates an opportunity for savvy investors to spot undervalued miners.

The Need for Narrative: Miners who can clearly articulate how their multifaceted operations enhance resilience and reduce reliance on volatile BTC prices will attract more discerning institutional money.

While a post-halving recovery is likely for mining stocks, it may echo Bitcoin’s price action from previous cycles – slow and steady following an initial dip.

Key factors influencing  BTC price recovery:

Operational Efficiency is a Must: Miners need strategies beyond simply holding Bitcoin to survive. Slashing costs, optimizing hashrate, and exploring revenue streams like hashrate rentals are key to weathering short-term volatility.

New ETF Approvals: A surge in institutional Bitcoin products in markets like Asia or the UK could have an immediate positive impact on miner share prices. This emphasizes the global landscape, showing that miner fortunes aren’t tied exclusively to US markets.

Alternative Funding: Expect to see more private equity moving into the space. Miners with strong fundamentals, but perhaps facing debt burdens, could become attractive targets for funds seeking long-term exposure to the Bitcoin economy.

Who’s Best Positioned To Thrive For BTC Halving In April

Heavyweights with Big War Chests: Marathon and Riot’s sizable cash and BTC holdings (over $1B each) put them in a commanding position. Smaller, but still well-funded players like CleanSpark ($300+ million) are also ones to watch.

Potential Acquisition Targets: Smaller, struggling miners like Stronghold Digital might see interest from opportunistic buyers. Identifying those with valuable assets (low-cost power deals, new-gen hardware) is key to spotting potential buyouts.

Hidden Gems: Analysts suggest keeping an eye on Riot (high cash/BTC ratio), Iris/Bitfarms (rapid hashrate expansion), and infrastructure-focused Core Scientific/Terawulf (seen as undervalued). Balance that against potential risks, like debt burdens or aging equipment.

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