BTC Tops 21k
As we kick off the new year, the crypto market shows renewed strength, with Bitcoin leading the charge. Experts attribute this to a combination of factors, including inflation and interest rates, which have helped the cryptocurrency break above the $21,000 level. Despite the challenges faced in 2022, following the collapse of the centralized exchange FTX, Bitcoin has made a solid recovery, with trading picking up in the new year. Investors are optimistic about the future potential of cryptocurrency as it continues to make gains in the market. Early Tuesday, Bitcoin crossed the $21,000 mark for the first time in two months, with a YTD return of 28%. In addition, crypto investors are rejoicing over the slowing inflation and the possibility of interest rate cuts by the Federal Reserve in 2023. It's worth noting, however, that despite these gains, Bitcoin is still far off from its all-time high of $69K recorded in November of 2021.
What’s Happening in the Space?
In recent news, the two individuals behind the former hedge fund Three Arrows Capital (3AC) are teaming up to raise $25 million from investors for their new project, GTX. The new project's name seems similar to the controversial FTX, and the funds will be used to launch a new exchange focusing on trading in crypto bankruptcy. Reports indicate that FTX creditors will transfer their claims to GTX upon the launch.
3AC was once one of the largest hedge funds in the crypto space, but it has recently faced failures and troubles in the industry. Given the recent track record of the individuals behind this new project, it's hard to see anyone backing them.
In recent news, cryptocurrency firm Genesis has announced plans to file for Chapter 11 bankruptcy. The situation reached a boiling point when Cameron Winklevoss, co-founder of Gemini, wrote an open letter to Barry Silbert, CEO of Digital Currency Group (DCG) - the parent company of Genesis, criticizing the practices and calling for accountability.
Bitcoin Halving Event! Coming Soon….
The Bitcoin Halving event is one of the most highly anticipated events in the history of cryptocurrency. This event, also known as the “halving,” occurs every 210,000 blocks mined on the Bitcoin network. Essentially, it is a mechanism built into the Bitcoin protocol that reduces the rate at which new Bitcoins enter circulation.
The next halving event is expected to occur in March 2024. However, the exact date can vary due to the fact the timing of the halving event is based on the number of blocks mined on the Bitcoin network, which can fluctuate slightly.
As for the impact on the price of Bitcoin leading up to previous halving events, there is no definite pattern. Generally, the market tends to react differently, leading to halving events. In the lead-up to the first halving event in 2012, the price of Bitcoin did not experience a significant increase, it was only around $12. The price of Bitcoin at the time of the second halving event in 2016 was around $650. The price of Bitcoin at the time of the third halving event in 2020 was around $9,000.
It's believed that the price increase following halving events is due to the decrease in the rate at which new Bitcoins are being created. Halving events reduce the number of new Bitcoins being added to the market, which can lead to increased demand for existing Bitcoins. This increase in demand can push up the price. Additionally, halving events are widely anticipated by the crypto community, and market participants may buy in anticipation of a price increase following the event.
New bitcoins enter circulation as block rewards produced by miners' efforts. These miners use expensive equipment to earn or mine new bitcoins. This process will continue until the total number of circulating bitcoins reaches 21 million. Most experts estimate that this will occur sometime near the year 2140. After the 32nd halving event, no more bitcoins will be created, as the maximum of 21 million will have been reached.
This is an important event for miners and investors, as it has historically led to an increase in the price of bitcoin. The scarcity of bitcoin, which is a result of the halving event, is one of the factors that makes it a valuable asset. As we approach the next halving event, it is vital to keep an eye on the developments in the bitcoin market and consider how it may impact the value of your investment.
Holding More than One Bitcoin on the Rise
As the popularity of Bitcoin continues to grow, so too does the number of individuals holding more than one Bitcoin in their wallets. According to data for Glassnode, the number of addresses and wallets containing more than one Bitcoin has significantly increased in the last few months. This trend can be observed by looking at November, December, and January data.
In the past 12 months, there has been a trend among BTC holders to move their coins off centralized exchanges (CEXs) and into self-custody. This trend has accelerated in the wake of the collapse of one of the largest CEXs, FTX.
Self-custody of Bitcoin refers to holding and managing one’s private keys instead of entrusting them to a third-party exchange or other custodial services. When Bitcoin is in self-custody, the holder has complete control over their coins and can ensure their security by using hard wallets or keeping the private keys in cold storage.
The result of more Bitcoin going into self-custody could mean that a large percentage of the total BTC supply is being held for long-term investment and savings. This could have implications for the stability and potential growth of the Bitcoin market. It also highlights the importance of individuals taking responsibility for the security of their own assets in the digital age.
Thank you to all of our subscribers for your continued support, and I look forward to bringing you more updates on the crypto market in the coming weeks.
Not Financial Advice
Please note that all opinions in my newsletter are strictly my own and should not be considered financial advice. It is important to conduct your own research and make your own investment decisions. Always consult a qualified financial advisor before making any investment decisions.