Bitcoin and the broader crypto market traded in a tight range over the last week after news that it’s unlikely there will be a rate cut at the next Fed meeting in March. Bitcoin was trading slightly higher at US$42,780, up 0.89% while Ethereum was up 0.11%. Bitcoin’s market capitalisation is up to US$839.2 billion, with the total crypto market cap at US$1.64 trillion, and bitcoin’s market dominance rising to 51.2%.
| Price | High | Low | Change from previous week | |
| BTC (in US$) | $42,780 | $43,725 | $41,705 | 0.89% |
| ETH (in US$) | $2,289 | $2,385 | $2,238 | 0.11% |
Source: CoinMarketCap. As at February 4, 2024. Past performance is not indicative of future performance. Performance is shown in US dollars and does not take into account any USD/AUD currency movements.
Source: Glassnode. Past performance is not indicative of future performance.
Crypto news we’re watching
Bitcoin’s fourth halving
The anticipation for bitcoin’s fourth halving, projected to be 19 April, has begun1. But what exactly is the halving and why does it matter?
The halving is a protocol-defined event recurring every 210,000 blocks or approximately every four years. The reward granted to miners for validating transactions and adding blocks to the blockchain will be reduced by 50%, down to 3.125 BTC.
Bitcoin was designed to have a limited supply of 21 million. To achieve this, the creator(s) programmed the limit into the blockchain’s algorithm, and the halving event creates scarcity through a gradual and controlled release of bitcoin.
Past halving cycles have had a substantial impact on the price of bitcoin. Both positively and negatively.
It’s important to note that past performance is not a guarantee of future results, but in the past we have seen initial increased interest and demand, driving up prices post-halving events.
Four major catalysts in 2024
According to asset management firm Ark Invest’s Big Ideas 2024 publication, there are four major catalysts in 2024 for bitcoin.
The first major catalyst that Ark sees is the launch of spot bitcoin ETFs, which took place in January, allowing investors to buy and sell bitcoin through their existing brokerage accounts. The second is the bitcoin halving which happens every four years and which will reduce bitcoin’s inflation rate. The third is ‘regulatory developments’, which may include the passage of a US bill establishing a regulatory framework for cryptocurrencies. And the last major catalyst is institutional acceptance, with Ark predicting that “the shift in perception of bitcoin – from a speculative instrument to a strategic investment in a diversified portfolio – should characterise its evolution in 20242“.
Marathon takes over two bitcoin mining sites
Marathon will pay Hut 8 US$13.5 million to take over control of two bitcoin mining sites that were acquired last month, but which are still operated by Hut 8. Marathon expects this to reduce operating costs and to streamline the implementation of its technology to improve operational efficiency, both of which will improve its cost to produce bitcoin. The transition is expected to be completed by 30 April 2024, making Marathon both owner and operator of the mines in Granbury, Texas and Kearney, Nebraska3.
According to its website, Marathon Digital Holdings is one of the largest, most energy-efficient, and most technologically advanced bitcoin mining companies, as well as one of the largest holders of BTC among publicly traded companies in North America. Marathon is currently held in Betashares Crypto Innovators ETF (ASX: CRYP) (as at 4 February).
On-chain metrics
Bitcoin (BTC): Circulating Supply
This metric shows the total number of coins ever created/issued i.e. the circulating supply.
According to data from Glassnode, out of the 21 million maximum possible supply of bitcoin, 19,617,500 already exist.
Source: Glassnode. Past performance is not indicative of future performance.
This metric shows the circulating supply adjusted for lost coins. The number of lost coins is estimated as all those that have not moved in over seven years.
According to data from Glassnode, after taking into account lost coins, there are 14,979,819.73 coins circulating.
Source: Glassnode. Past performance is not indicative of future performance.
Altcoin news
Blockchain analytics firms have reported Doge network activity has soared. According to IntoTheBlock and Santiment, over the last week daily active addresses are significantly higher. One of the reasons for the surge in activity could be the release of the popular Doom video game on the Doge blockchain and the upcoming DOGE-1 launch4.
According to its website, ‘Dogecoin is an open-source peer-to-peer digital currency that utilises blockchain technology, a highly secure decentralised system of storing information as a public ledger that is maintained by a network of computers called nodes’. It is considered the first memecoin and although created initially as a joke, now has projects being developed on the blockchain.
Investing in crypto assets or companies servicing crypto-asset markets should be considered very high risk. Exposure to crypto assets involves substantially higher risk when compared to traditional investments due to their speculative nature and the very high volatility of crypto-asset markets.
Investing in crypto assets or crypto-focused companies is not suitable for all investors and should only be considered by investors who (i) fully understand their features and risks or after consulting a professional financial adviser, and (ii) who have a very high tolerance for risk and the capacity to absorb a rapid loss of some or all of their investment. Any investment in crypto assets or crypto-focused companies should only be considered as a very small component of an investor’s overall portfolio.
References:
1. https://www.coinwarz.com/bitcoin-halving#:~:text=Bitcoin%20halving%202024%20date%20prediction,sometime%20on%20April%2019%2C%202024.
2. https://www.ark-invest.com/home-thank-you-big-ideas-2024?submissionGuid=d32361ff-4d20-4fc5-bc3b-dd4ce6bf9735
3. https://www.theblock.co/post/275763/marathon-hut-8-bitcoin-mining-sites No assurance is given that this company will remain an index constituent or will be a profitable investment.
4. https://cointelegraph.com/news/dogecoin-network-activity-goes-parabolic-will-doge-price-follow
Past performance is not indicative of future performance.
Off the Chain is published every second Tuesday. It provides the latest news on bitcoin and the rest of the crypto market, along with analysis and insights into the world of crypto.
It provides general information only and is not a recommendation to invest in any crypto asset, crypto-focused company or investment product.
This article mentions the following funds
Written by
Justin Arzadon
Director, Adviser Services & Head of Digital Assets.
C4 Certified Bitcoin Professional (CBP) and Blockchain Council Certified Bitcoin Expert™ with over 18 years’ experience in the ETF market. Passionate about the future of money.
Read more from Justin.