Last week, our blockchain expert Berend wrote: ‘In short, reason enough for a consolidation in the market, without affecting the fundamental, bullish structure’. A lot has happened between then and now, while the price in the crypto market is roughly at the same point (i.e. consolidation). But positive news often leads to price increases, right? How about that?
A short tour d’horizon 👇
We dwelled on three key developments: ETF, Halving and Interest rates. We observed that the effects of these developments would manifest gradually. Meanwhile, the first hints are trickling in that something is fundamentally changing, in line with our observation.
- ETF: Since a few days, the first institutional parties have announced that they have bought the Bitcoin ETF. These include parties such as US banks JP Morgan and Wells Fargo. Swiss bank UBS and Canada’s Bank of Montreal have also now bought shares in one or more Bitcoin ETFs. It is now expected that others will follow in their footsteps….
- Halving: ls the halving does its job well, it becomes harder to get hold of Bitcoin for those securing the network, the miners. These are the parties who use computer power to seal the blocks of transactions and add them to the blockchain. In short, we should see that it becomes less profitable to use inefficient computers to search for new Bitcoin because it takes just as much energy for only half the coins! We can measure this as the overall computing power of those computers (the so-called ‘hash rate’) drops and the Bitcoin protocol lowers the difficulty (‘network difficulty’) of finding new Bitcoin. We now observe both effects on the blockchain.
- Interest rates: After strong inflation figures coupled with weak economic data from the US, the market is eagerly awaiting what the latest inflation figures will be and what Federal Reserve will announce.
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__Disclaimer:__This is not financial or investment advice. These analyses Berend writes in a personal capacity and are based on his own perspective.
