The BTC Aftermath - Biggest Winners vs. Winners?

Ticker Symbols:- Bitcoin (BTC) - $63,645.80, Ethereum (ETH) - $3,340.41

The Halving

The 19th of April 2024, saw the 4th halving take place when the 840,000th block was mined, signalling the halving of rewards of crypto mining and subsequently, the amount of BTC created went down, from 6.25 BTC to 3.125 BTC every 10 mins. We have already explored the potential downsides of this event and I think it's only prudent to flip the coin and talk about the upside, that has most of the bullish community ready to jump on the bandwagon for a ‘one way’ ride to the moon.

Price Movement

The current price per BTC is sitting at $63,645.80 which is down 10% on a month-to-date basis. But, that isn’t all doom and gloom yet. At least, if we look at historical price action after the halving 3rd event, from the 11th of May 2020, BTC hovered underneath a ceiling of $9998.0 that was set a few days before the 11th of May, till July 26th where it finally broke the hard line ceiling. The reason for this was largely spillover benefits of the economic action on the Ethereum Blockchain due to the increased interest in Stable Coins and activity in Decentralised Finance, commonly known as DeFi. Around this time, we then saw ETH surpass the BTC daily settlement values to about $2.5 Billion for the 1st time ever, on the 21st of July 2020.

Now, there is a reason for the history lesson. The ‘bull gang’ is anticipating the price to go up like it did before and offset the cost of mining, on the part of institutional miners at least, and on the part of retail and institutional investors alike. For slightly varying reasons of course, but for profit really. No surprise there.

Mining Cost vs. Rewards

In my previous article, I outlined the cost expectation for post halving mining per BTC. Most institutional miners expect the BTC price to rise to offset the mining cost. But, this again isn’t an immediate take off. There was however a sharp spike on the price and that can be largely attributed to users rushing to mint speculative coins on Bitcoin, commonly referred to as ‘memecoins’ pushed the transactions fees upwards of $82 million according to crypto-mining researcher, TheMinerMag. This mechanism is enabled by the Rune Protocol, the brainchild of developer Casey Rodarmor, who also created another mechanism that allows people to make non-fungible tokens on the Blockchain.

With the transaction fees rising above the block mining rewards by such a lopsided margin, the revenue for miners charged way above normal levels, which amounted to about 1,675 BTC or about $109 million at the time.

I’m sure the ‘BTC to the moon’ bull gang, surely thought that this must be the rocket they had long predicted but this wasn’t to be, at least for now. This was an anomaly and soon after, started self correcting, seeing the fees come back down to earth. No shocker there.

The Reality

So, who are the real winners here? If history has taught us anything, BTC will see its time in space, but maybe just not yet. Consolidation will need to take place amongst the institutional miners to leverage capacity and technology. And, maybe we will see an even wider adoption from the broader market. But, as previously seen, it usually takes a spark that sets off that countdown for the BTC rocket. Will we see a $100,000 BTC soon? Well, I’m here for it!

Posted in Crypto on May 02, 2024