Bitcoin 2024 Halving Edition

02.05.24 08:43 AM By Stormrake

The Rake Review: April 2024

The 4th Bitcoin halving has finally arrived, the 840,000th block has been mined. Is this where the fun begins or will we have to wait a little longer?

A clearer view of the image above can be found here: https://www.tradingview.com/x/hXx6mv9Y/

Whilst the Bitcoin halving is one of the most anticipated crypto events every four years, the following month hasn’t yielded the greatest blow off returns. It has been quite the opposite with sideways price action.

Could we be in store for a slow month of May? Previous price action seems to suggest so. However, if previous price action is anything to go by, the following year will be one that every BTC holder can look forward to.

Based on the previous cycle, the peaks following the 2016/2020 halvings took 518 days and 539 days respectively. Therefore, we can assume that the next peak may occur in approximately 550 days from the halving which would occur in late 2025.

BTC vs Real Estate:

BTC investment and renting VS Real estate investment

In Australia, the property market has always been a hot topic, and many believe that investing in real estate is the key to financial security. However, with the rise of Bitcoin and other cryptocurrencies, a new debate has emerged: Is it more financially beneficial to invest in property or Bitcoin?

Let's break down the numbers to see how this might play out in the Australian context.

Property Investment:

The average price of a home in Australia is around $650,000. If we consider a home loan with current interest rates over a 30-year term, the total cost of a $650,000 home, including interest, could reach approximately $1.2 million.

Assuming a Compound Annual Growth Rate (CAGR) of 10% over 30 years (which is typical for the Australian real estate market), the property's value could potentially grow to $5.8 million.

For a 20% down payment on this property, you'd need $130,000.

Bitcoin Investment:

Instead of investing in property, what if you invested that $130,000 into Bitcoin?

Currently, with the value of Bitcoin, that amount could get you approximately 1.3 Bitcoins.

Renting a property over 30 years might cost you around $900,000, depending on the rent and inflation.

Now, here's where it gets interesting. With a conservative CAGR of 20% for Bitcoin (which has been low historically for Bitcoin), that initial investment of 1.3 Bitcoins could potentially grow to a staggering $18.9 million over 30 years.

So, the question remains: Is it worth investing in property for the long term in Australia, or could Bitcoin offer better financial gains? The answer isn't straightforward and depends on various factors, including market conditions, risk tolerance, and personal financial goals. However, it's essential to consider all investment options carefully and seek professional advice before making any decisions.

Inflation: A Persistent Menace

At the beginning of the year the US Federal Reserve Chairman Jerome Powell was hopeful that they may see three rate cuts in 2024, similarly, Australian analysts at MLC and AMP were calling for three rate cuts with the first beginning in May. However, this does not seem to be the case as inflation is not slowing down with recent CPI (consumer price index) continuing to grow greater than expected.

CPI measures the cost of goods and services purchased by households, when these numbers increase, then it is a strong indicator that inflation is still rising. In order to see rate cuts, we need to see these numbers fall.

Currently the US interest rate is between 5.25-5.50%, with the next meeting on the 1st of May, the probability of a rate cut is almost non-existent with a 97.3% likelihood of no adjustment, with the smallest chance of a cut at 2.7% chance.

Whilst the bank rate in Australia is lower than the US, we tend to follow the trend that the US Federal Reserve sets when it comes to adjusting interest rates. Australia also had a growing CPI figure this month. Thus, meaning the likelihood of a cut of the bank rate is extremely low.

Unfortunately, with inflation persisting, we could see prices higher for longer until the reserve banks manage to get it under control. In the meantime, stack your BTC.

New Bear Market or a Post Halving Correction?

A clearer image of the chart above can be found here ---> https://www.tradingview.com/x/hjOXc3H5/

One of the most anticipated months of Bitcoin’s recent history has come to a close. Unfortunately, it wasn’t a good close. BTC ended the month down 15% as well as creating a bearish engulfing candle.

The last two days of BTC dumping has caused a great stir around the Bitcoin community with sentiment declining. Whispers have started to emerge regarding the end of the bull market and the new bear market beginning. Are these people onto something or are we just experiencing a post halving correction?

The chart above shows a potential worst case scenario for BTC if indeed this is a major correction. In 2021, BTC experienced a blow off top and created a new all time high before a bearish spinning top candle was formed. Thus, resulting in a correction of near 50% to the 0.382-0.5 fibonacci zone over the next few months ahead rallying once more and creating a new all time high.

Could we see a similar scenario play out this cycle after April created a new bearish monthly candle? If so, then the key to surviving this correction is to continue to stack your Bitcoin. As the only thing that has proved itself over the cycles is continuing to buy BTC (ESPECIALLY WHEN THE PRICES ARE LOWER!!). The people who do so are the ones who are laughing at the end of the day when the markets turn and the bull run resumes.

The Sat that sold for over $3 Million AUD

The Bitcoin community recently witnessed some wild antics and jaw-dropping transactions during the latest halving event, reminding everyone that in the world of cryptocurrency, there's never a dull moment.

First up, let's talk about the "epic sat" – a super rare satoshi that caused quite a stir on CoinEx Global. Mined from the fourth Bitcoin halving block by the mining group at ViaBTC, this little digital gem fetched a staggering 33.3 Bitcoin (BTC), or roughly $3,271,826.19 Australian Dollars.. With only four of these epic sats in existence, owning one, is like owning a piece of BTC history.

The halving block itself, Block 840,000, turned into a battleground as miners fought to cement their spot in cryptocurrency history. Fees skyrocketed to an eye-watering 37.7 BTC, totaling over $3.65 million AUD. ViaBTC, the lucky miner behind the madness, scored big time with a cool 40.7 BTC in their pocket.

This is just another day in the ever-evolving world of Bitcoin and cryptocurrency. With each halving event, we're reminded that this digital frontier is full of surprises, thrills, and plenty of opportunity.

But beyond the thrill of the chase and the astronomical figures involved, these events also shine a spotlight on Bitcoin and cryptocurrency as a whole. They validate the growing attention and interest in this digital asset class, reinforcing its position as a force to be reckoned with in the financial world.

Market Update

Here is the fast five of what you need to know about the market in March 2024:

BTC fell 15% during the month of April; an extremely disappointing month coming off all-time highs in March and the BTC halving during the month.
Majority of Altcoins suffered a retracement of at least 20% with some suffering 50% or more corrections.
Toncoin (TON) was the major surprise of the month, becoming a Top 10 cryptocurrency.
Hedera (HBAR) rallies 100% in a day based on a misinterpretation of involvement with Blackrock, HBAR has retraced nearly 50% since the mistake was cleared up.
The average buy price of BTC purchased by ETFs is approximately $57.5k

Video of the month

BTC Halving explained by the great Andreas Antonopoulos

In the news

BTC Halving saw trading volumes spike like no other with over $50 billion volume traded.
Hong Kong’s Spot Bitcoin and Ethereum ETF’s have launched. Whilst not the first to launch a BTC ETF, they are the first to create and launch an Ethereum ETF.
Australian Securities Exchange (ASX) is expected to approve the first batch of Spot Bitcoin ETFs before the end of the year.
Post halving, it has been recorded that the electrical costs to mine one Bitcoin is approximately $77,400 USD. At the time of writing, miners are having to spend approximately $17,000 more in electricity for each mined BTC, currently worth $60,000 USD.
Founder of the largest cryptocurrency exchange Binance, Changpeng Zhao (CZ) has pleaded guilty to money laundering violations and has been sentenced to four months in prison.

Education

The USD/JPY Standoff

With the USD/JPY pairing hitting the highest level it's been in three decades at 156. Concerns continue to grow with the Bank of Japan (BOJ) and their actions regarding the Yen.

The BOJ are the largest holders of US Bonds, this is both a good thing for the Yen but may potentially cause an issue for the USD. As the Yen continues to weaken, the BOJ will be forced to sell their US Bonds in attempts to buy back their own currency and strengthen the Yen. By doing so, the USD will be impacted and will likely fall.

Hence, the standoff between the US and Japan, if the BOJ does not intervene and sell off their US bonds, the Yen will continue to weaken whilst other currencies strengthen against it. However, if they begin to sell off their bonds, the USD and other countries bonds held by the BOJ will cause their respective currencies to fall. So both the BOJ and US Federal Reserve will need to find a way to resolve this dilemma.

Japan and the US follow Keynesian economics with Japan being the extreme case. Is this causing the dilemma at hand, is there another solution? This may be a sign that currencies of both the dollar and yen aren’t good stores of wealth as they are both so easily manipulated by external factors. This is where Bitcoin comes into play, it has proven to be one of the best places to store one's wealth over the last decade or so. People may begin to recognise the unreliability of the way these nations' economies are set up due to the fact that storing their wealth in their nation’s currency causes them to lose purchasing power. The inherent volatility of these fiat currencies are also causing people to realise that these currencies may not be as stable as initially thought.

Bitcoin may be able to provide them with the solution to this issue. Whilst BTC has experienced bear markets, over time it has continued to outperform all major currencies, patience is required with this solution, but it has proved to be a successful one.

Memes of the month

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