THE COIN STREET JOURNAL
Market News - April 23rd, 2024
THE INITIAL RESPONSE TO BITCOIN HALVING
Following the recent “halving” of the Bitcoin network, the cryptocurrency’s price has seen only a modest increase of around 4%, trading at approximately $66,500. This event, which reduces miner rewards for adding blocks to the blockchain, historically leads to price surges, but the expected gains have yet to materialize significantly. Experts suggest that the immediate impact of the halving on Bitcoin’s price may not be fully evident yet, with potential effects unfolding over the coming weeks and months. Factors such as the total computational power used for mining, known as hashrate, are likely to influence future price movements. The observed stability in Bitcoin’s price post-halving may also be attributed to a phenomenon known as “buy the rumor, sell the news,” where investors anticipate events like the halving and adjust their positions accordingly. This trend could explain the 12% drop in Bitcoin’s price in the weeks leading up to the event.
Despite the subdued performance of Bitcoin itself, stocks of companies associated with cryptocurrency, such as Microstrategy, Coinbase, Marathon Digital Holdings, and Riot Platforms, have experienced significant gains. Microstrategy, the largest corporate holder of Bitcoin, saw a 15% increase in its stock price this week. The rise in stock prices of Bitcoin-related companies reflects market confidence in their ability to adapt to the halving’s effects and maintain profitability. Analysts believe that major miners will continue to provide sufficient hashrate by upgrading to more efficient hardware, ensuring the functionality of the blockchain.
However, in the immediate aftermath of the halving, the network’s hashrate decreased by approximately 5%, as some miners either went offline or reduced their operations to avoid losses. This decline is seen as a typical response to the event, with expectations of a rebound in hashrate as miners enhance efficiency and competition intensifies. Despite the temporary decrease in hashrate, industry experts anticipate a gradual increase as larger miners deploy more efficient machines acquired during the year. Factors such as the rate of change in total hashrate, the difficulty of production, and the price of Bitcoin remain key variables influencing the network’s stability.
The halving event signifies a significant milestone in Bitcoin’s protocol, highlighting the ongoing evolution of the cryptocurrency ecosystem. While immediate price movements may not always align with expectations, the long-term implications of such events are closely monitored by investors and analysts alike. Market participants continue to assess the broader implications of the halving on
Bitcoin’s supply dynamics and its impact on price stability. The event underscores the importance of understanding the interplay between technical developments and market sentiment within the cryptocurrency space.
As Bitcoin enters a new phase post-halving, stakeholders remain vigilant, anticipating further developments in mining technology, regulatory frameworks, and investor behavior that could shape the future trajectory of the cryptocurrency market.
BITCOIN FOR THE LONG TERM?
Investing in Bitcoin is highlighted as a standout choice amidst the overwhelming array of cryptocurrencies available, with its simplicity and potential for portfolio growth emphasized. While some may view Bitcoin as unexciting compared to lesser-known options promising higher gains, underestimating its long-term potential is deemed a significant oversight. The recent approval of spot Bitcoin exchange-traded funds (ETFs) is cited as a milestone that has expanded Bitcoin’s accessibility to traditional wealth management sectors, potentially leading to a substantial influx of capital into the Bitcoin market.
Analysts speculate on the impact of this newfound accessibility, suggesting that even a modest 2% allocation from the $100 trillion wealth management industry could significantly boost Bitcoin’s price. Some anticipate allocations as high as 5% or even 19%, with corresponding price projections ranging from $300,000 to well over $2 million. These forecasts indicate the immense potential for Bitcoin to appreciate in value as institutional adoption increases.
Beyond its financial prospects, Bitcoin’s behavior is likened to that of a natural system, with its growth driven by network dynamics rather than traditional asset patterns. By applying mathematical concepts like the power law, analysts project Bitcoin’s future price trajectory, with models suggesting a minimum price of $1.6 million and potential highs of $10 million by 2040. While acknowledging the speculative nature of such projections, the reliability of these models underscores Bitcoin’s enduring potential.
Ultimately, Bitcoin’s proven track record, market dominance, and influence on other digital assets solidify its position as the premier cryptocurrency for investment. Despite uncertainties surrounding its future, the consistent growth and reliability exhibited by Bitcoin make it a compelling choice for investors seeking long-term gains.
MILLIONS OF DOLLARS WORTH OF CRYPTO TOKENS STRANDED
Arkham Intelligence, a crypto analytics firm, has uncovered that millions of dollars worth of crypto tokens are stranded in various bridge contracts, left unclaimed by their rightful owners. The firm has identified numerous accounts, including those of DeFi and NFT players, with significant sums of cryptocurrency forgotten in bridge contracts designed to facilitate asset transfers between different blockchains.
Among the notable cases, one wallet with the Ethereum Name Service (ENS) name “thomasg.eth” has left approximately $800,000 in Arbitrum’s native bridge for nearly two years. Similarly, an Ethereum address associated with Bofur Capital contains approximately 27 wrapped bitcoins (equivalent to $1.8 million) that have remained untouched in the Arbitrum bridge for over two years, with total assets in the address exceeding $14 million.
Additionally, an NFT user identified as Mike Macdonald failed to claim around $117,000 in assets linked to Cryptopunks sales on a bridge contract. These instances highlight the challenges faced by large crypto holders in tracking assets when moving them across different chains.
In a significant revelation, an account that received 50 ETH from Ethereum co-founder Vitalik Buterin has left the funds untouched in the Optimism bridge for about seven months, amounting to roughly $1.05 million in unclaimed assets. Arkham directly addressed Buterin, notifying him of the forgotten funds.
Unlike cross-chain bridge protocols that automatically transfer funds to users on the destination chain, native bridges may require manual claiming of assets. If users forget to initiate this process, the smart contract lacks mechanisms to remind them, potentially resulting in forgotten funds.
Arkham issued a reminder to all individuals and entities involved to review their transaction histories and bridge activities to ensure that all assets are properly accounted for. The firm’s findings serve as a cautionary tale for crypto holders to remain vigilant and proactive in managing their assets across various blockchain ecosystems.