Bitcoin's 4th Halving Is 14 Days Away, and $100,000 Isn't Much Further Behind It
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Good afternoon readers,
Bitcoin continues its consolidation in the mid-$60,000 range. In keeping with its previous phases of consolidation at $30k and $40k, the latter of which you can see in the chart below, BTC spends several weeks at key psychological price levels exchanging hands between buyers and sellers before advancing higher. We're now entering week 6 of the current consolidation above $60,000. Noteworthy to keep in mind: this is the least volatile period that bitcoin has had at a) this price level, and b) after breaking a new all-time high. Confidence remains strong in this bull:
The market at large has experienced massive correlation breaks this cycle. What I mean is that generally: we're either in a regime where good economic news produces bad stock prices, or good economic news produces good stock prices—the S&P 500 has experienced both during this cycle and has done nothing but go up since last October. It has risen 1100 points in 5 months, regardless of whether economic data releases are good or bad. My take is that this has a great deal to do with a) businesses extending their debt maturity during 2021 when rates were still low, so most are still unaffected by rates but experiencing huge growth due to price increases, and b) the US Treasury's massive crisis-level fiscal deficit is offsetting any of the economic downturn we'd otherwise be experiencing. Either way, the stock market has never been a less reliable indicator of US economic sentiment. What stands to benefit in all of this mayhem? Asset prices. Bitcoin included:
This was one of the lowest weeks yet for BTC ETF inflows, although when you net in the outflows they are still healthy compared to previous weeks. GBTC outflows slowed this week and analysts like James Seyffart expect them to continue slowing:
Volume for the bitcoin ETFs remains healthy. Look at the chart below, this was not a slow week for the 10 ETFs by any stretch. Knowing that net inflows weren't too high this week, we can infer that the spot bitcoin ETF holders are doing the same thing that the spot market is doing: consolidating. ETF shares are changing hands between buyers and sellers, just as the underlying BTC price action suggests:
While net bidding from Wall Street may be slowing as the world settles into Q2, the spot bitcoin market is providing ample and persistent buying pressure to send it higher. This is a map of bitcoin's funding rate in the perpetual futures market. See how high it was when BTC first surged from $52,000 to $74,000? That means longs were paying huge premiums to hold contracts; the rally was led primarily by the futures market, and the derivatives market broadly. Compare that to today: the funding rate is extremely muted, and we're still at the same price. In this period of consolidation, the spot market has really taken control of bitcoin price action. This will mean more stable footing for the ensuing bull run, raising my confidence further that this consolidation is preceding a move higher rather than lower:
The current market structure has me very confident about bitcoin's staying power in the $60,000 range or higher, and all the more excited for what's to come in just 14 day's time. Bitcoin's 4th programmatic supply schedule reduction of 50% is scheduled to take place at block height 840,000, only a few thousand blocks higher than the current 837,877 block height, at the time of writing. Lots of bitcoin's components are divisible by 7, including its calendar for the changes to its supply schedule, which occur every 210,000 blocks. Three of these events have occurred so far, and many more are in the pipeline until all 20,999,999.999 BTC are mined in approximately 2140. These events have historically generated a supply shock to bitcoin's price, with all previous halvings having preceded a large bull run. You can clearly see this in the chart below. Bitcoin's pre-halving price action serves as a staging area for the ensuing supply shock and several-hundred-% bull run that follows. After months of regaining its previously-attained all-time highs, edging higher in $10,000 increments each time, bitcoin is primed to embark on one of its hallmark post-halving runs, starting in earnest in just two week's time. Tick tock:
Here's a more detailed view of exactly what I'm talking about. This is the percentage growth of each halving epoch so far. As it monetizes into an ever-larger asset, the percentage growth following each halving has diminished. Bitcoin rose 7,745% in the first halving epoch, 393% in the second, and 366% so far in the third. Should this trend remain intact, excluding the extreme growth of the first halving epoch where bitcoin was the size of a microcap tech stock, we are looking at another 350% increase or more in the next 210,000 blocks, some 4 years, to come. Pair this cycle study with the runaway US fiscal situation and an ever-increasing cohort of investors seeking to insulate themselves from it, and it becomes an absolute certainty that we're in for yet another sweeping bull run for bitcoin:
Final thought: tick tock...
Take it easy,
Joe Consorti
Theya is an app for simplified Bitcoin self-custody. With our Modular Multisig solution for self-custody, you decide how to hold your keys.
Whether you want all your keys offline, shared custody with trusted contacts, or robust mobile vaults across multiple iPhones, it's Your Keys, Your Bitcoin.
Download Theya on the App Store and secure your bitcoin with ease.