Analysts Expect a Price Surge as Bitcoin Halving Approaches 🤑

🐺 Hi pack-mates,

This is Howling Markets, the information fund that is expected to make your financial knowledge skyrocket!

Today we will be covering:

• Education: What Is Cryptocurrency Halving? 📊

• Ark Innovation ETF Has Gained +68% in 2023 📈

• Analysts Expect a Price Surge as Bitcoin Halving Approaches 🤑

• Equity and Debt Markets Daily Update ⚖️

• And more!

Market Watch 👀

What is a Cryptocurrency Halving?

Halving is a practice adopted by most cryptocurrencies used to slow down the supply of tokens. Because of this, halving is used to limit the coin’s supply and increase the price.

Just as a reminder, Proof-of-Work cryptocurrencies increase their supply by rewarding the “miners” who are able to solve complex mathematical problems and to add a new block to the blockchain.

For Proof-of-Work (PoW) cryptocurrencies, halving is performed by cutting in half the cryptocurrency reward attributed to the miners. So, such a halving will not reduce the supply of cryptocurrencies in the short run, but it will cause a slowdown in the supply, causing the price to increase even if the demand remains constant.

For Proof-of-Stake (PoS) cryptocurrencies, halving is performed by cutting in half the reward attributed to the validators, who are those market participants that stake part of their holding to validate a transaction on the blockchain.

It is important to know that halvings can be performed more than once on the same blockchain and that they can be performed also on the cryptocurrencies which have a fixed maximum supply.

For example, Bitcoin has a maximum supply of 21 million coins, but because it has not reached its maximum supply yet, Bitcoin halvings occur periodically without any major difference with variable supply coins. Once Bitcoin reaches 21 million coins, halvings will stop as there won’t be any more Bitcoins to mine.

Ark Innovation ETF Gained +68% in 2023

Ark Innovation is a widely famous exchange traded fund that goes by the ticker ARKK and has reached more than $8 billion assets under management since the end of 2014.

This fund is extremely peculiar as most analyst rate it “1 out of 5 stars” despite having performance great a couple of years, including 2020 where the ETF had exceeded a 150% annual return. The reason behind this rating is that between exceptional years, the fund has also had extremely poor performances.

Between the end of 2020 and the end of 2022, the ETF has lost almost 75% of its value, plummeting from around $124 per share to just over $31 per share. A staggering -80% lower than the all-time high.

Currently, the price is sitting “just” 70% lower than the all-time high thanks to an exceptional +68% yearly return in 2023. As a result, the average annual return over the last 5 years is just 2.8%.

Cathie Wood, the founder of Ark Invest, has commented the fund’s performance saying: “Honestly, I think what happened to us in 2021 and 2022 — a worse downturn than the Nasdaq during the tech and telecom bust — that doesn’t make any sense, because innovation is here and ready for prime time” and concluded by saying that after this strong correction, she expects the price to rebound and positive yearly returns to come in.

Do you believe that this fund betting on innovation is a great investing opportunity going forward, or do you believe that it is just not strong enough to sustain downturns?

Today’s Howling Question

And now, it is time for our howling question!

We have discussed Bitcoin halvings and how they are expected to end around 2140, but do you know which will be the last reward that miners will get for adding blocks right before Bitcoin reaches its maximum supply?

a) 0.1 BTC

b)  0.001 BTC

c)  0.00001 BTC

d) 0.00000001 BTC

e)  0

Hint: the reward is divided in 2 every time there is a halving and there are 29 remaining halvings after April’s.

Try to answer the question by yourself, and then check the correct answer after the last interesting news!

Analysts Expect a Price Surge as Bitcoin Halving Approaches

As expected, the fourth Bitcoin halving is set to take place in April 2024, four years after the previous one occurred on the 11^th of May 2020.

The halving is set to occur once the Bitcoin’s blockchain reaches the block number 840,000 which will coincide with when miners will have unlocked 96.875% of Bitcoin’s total supply, corresponding to more than 20.3 million bitcoins.

The current block reward attributed to the miners is 6.25 BTC, but after the halving it will become 3.125 BTC, exactly half the current amount.

Since the creation of Bitcoin, the halvings have roughly occurred once every four years, and given that after April’s one, Bitcoin will go through another 29 halvings before the maximum supply is reached, we can expect to reach that point around the year 2140.

However, it is not possible to pinpoint a precise date as each halving occurs every 210,000 blocks are created, so it depends on the speed with which this happens.

Experts believe that halvings have an extremely significant impact on the price of Bitcoin despite having different views on the magnitude of such impacts.

CoinCodex believes that Bitcoin will reach $49,300 before the halving and then the price will skyrocket to over $84,000.

On the other hand, BitQuant believes that Bitcoin could reach $160,000 pre-halving and then surge to $250,000 afterwards, even though this forecast seems pretty unreasonable given that BTC is currently trading at around $43,000.

What do you think is the impact of bitcoin halving on its price?

Equity and Debt Markets Update ⚖️

And now, our daily markets update!

Unexpectedly, the stock market continued to forcefully extend its all-time high by adding +0.76% during the trading session. Despite having started the day with a relatively low volume, during the later part of the session volume picked up and the price rose significantly, forming a strong candle with a large body and very short wicks.

The low volume days leading up to Monday can be explained by the fact that the Next FOMC meeting will take place on the 30^th and the 31^st of January. Usually, investors do not like to take positions before major news or decisions might be released.

As expected, after such a strong performance by the stock market, the bond yields plummeted. The 10 year US government bond yield fell by -1.57%. However, if the Feds will announce to be more dovish than expected, this downward trend could continue even more.

Answer

The correct answer is d) 0.00000001 BTC

This number, which could seem as a completely random amount of Bitcoins, is in fact extremely important and it is called a “satoshi”. A satoshi is the smallest unit of measurement for bitcoin, which cannot be split in half and any smaller unit of measurement will be rounded down to the nearest satoshi.

Because of this, it is expected that the last round of rewards will be just a single satoshi until the maximum supply has been reached.

Howl-Worthy Memes 😂

🐺 See you next time!

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