Market Update June 2024: The Fourth Bitcoin Halving

On April 20 at 2:09 AM, the 840.000th Bitcoin block was mined, marking the fourth Bitcoin halving. The inflation of Bitcoin has now been halved for the next four years, from 900 to 450 new bitcoins per day. Due to this special event, the pressure on the Bitcoin network temporarily increased, causing transaction fees to rise to €200 per transaction. Within a few days, this normalised, and transaction fees have since dropped back to less than €1.

These remain very interesting times for technical service providers and asset managers. We closely observe the network effects of the Bitcoin halving and ask ourselves once again: Will this halving be the same as the previous ones?

Market update

Bitcoin Analysis

The Bitcoin price experienced a significant drop of 17%, reaching a two-month low. At the end of April, it was noted that short-term wallets were selling at a loss due to their high purchase prices. Additionally, the demand from long-term wallets decreased, suggesting a high probability of a strong market correction. Nonetheless, the overall market sentiment remained positive, and the market recovered to higher levels due to strong buying pressure.

Ethereum Analysis

The Ethereum price experienced a decline of 15%, also reaching a two-month low. Although Ethereum and Bitcoin have a high price correlation, their synchronous movements have been absent in recent months. In April, the Bitcoin price almost broke its all-time high again, while the Ethereum price lagged by 9%. Interestingly, the Ethereum price also fell less sharply compared to the Bitcoin price. Overall market sentiment appears to be cautious regarding the approval of the Ethereum ETF.

Fundamentals

Blockrise offers complete care with its asset management strategy called "Fundamentals." Asset management is conducted with a position in Bitcoin and Ethereum versus a euro position. These positions are reassessed monthly, and adjustments are made.

Based on the fundamental model behind our asset management, the Bitcoin and Ethereum positions have been increased by +25% at a Bitcoin price of €53,800. This accumulation is based on the increased Bitcoin cost price and the significant drop in the Bitcoin market price. A 20% euro position remains in the asset management, which is used to increase the crypto position during strong market corrections or when the Bitcoin cost price rises.

Crypto highlights

An overview of the most notable events in crypto:

Grayscale Sees First Inflow Since January

For the first time since the launch of Bitcoin ETFs on January 12, the Grayscale ETF has seen a capital inflow. Grayscale saw an outflow of a total of 327,923 Bitcoin in recent months, highlighting the importance of capital inflow. The inflow at Grayscale significantly contributes to the overall sentiment of other Bitcoin ETFs. The Grayscale ETF remains the largest Bitcoin ETF, maintaining the scarcity of Bitcoin on the spot markets.

Notable Points Around the Bitcoin Halving

The pressure on the Bitcoin network increased significantly around the halving, as a large number of participants attempted to have their transactions included in block number 840,000. As a result, transaction fees rose sharply, and hundreds of thousands of transactions remained unconfirmed. Fortunately, this was short-lived, and the network balance was restored within a few days.

As a result of the Bitcoin halving, the programmed inflation has decreased to about 0.85% per year. This is because the issuance of new Bitcoins is fixed in the software. This makes Bitcoin now considered a rarer asset than gold, which enjoys an inflation rate of about 2% per year. However, the Bitcoin halving also has a significant effect on miners, as their earnings have greatly decreased. The long-term results will have to show whether Bitcoin miners will actually adapt to this.

Macro Economy

Announcement from the US Fed

Financial markets responded positively to the announcement from the Federal Reserve System, or Fed, after deciding not to raise interest rates this month. The responses to the Fed regarding interest rates and the inflation figures on May 15 even caused the Bitcoin price to fully recover after its market correction. The decisions on potential interest rate cuts in the coming months will be an important factor for the price development of the crypto market.

Launch of Hong Kong Bitcoin ETF

The launch of the Hong Kong Bitcoin ETF appears disappointing compared to the American variant, with a balance of $247 million. Expectations of significant capital inflows are low, as the Hong Kong stock market is much smaller than that of America. Additionally, the Bitcoin ETF is not available to Chinese investors, excluding a very large market. China has previously taken political positions regarding Bitcoin.