The bullish case for bitcoin post-halving is apparent. With the cryptocurrency embarking on its next phase, fueled by substantial demand from spot bitcoin ETFs in the U.S. amounting to billions of dollars, supplemented by forthcoming contributions from options trading and accessibility through major wirehouses later this year. Moreover, the availability of ETFs in locations like Hong Kong could further broaden investor access.
Simultaneously, the supply entering circulation has been significantly curtailed, potentially leading to a profound “supply shock” as some observers anticipate. In essence, there might be a surge in demand for a limited supply of bitcoin.
However, it’s prudent to weigh the bearish case for bitcoin, albeit it being less evident. The central notion here revolves around the halving’s drastic reduction of revenue for bitcoin miners, nearly halving their earnings. This could potentially reduce the number of profitable miners and result in a gradual decline in the hash rate over time.
Two mechanisms may counterbalance this effect. Firstly, the price of bitcoin: if it doubles, for instance, it could offset the impact of the halving. Conversely, a decline in bitcoin’s price would exacerbate the challenges for miners.
Secondly, transaction fees offer some hope. Projects like Ordinals and similar endeavors such as Runes are adding value on top of routine transactions. However, the rise of new products like ETFs is facilitating significant bitcoin trading and investment without commensurate on-chain transactions.
These contrasting arguments each possess their own momentum. In the bullish scenario, if bitcoin’s price cooperates, it could trigger heightened demand from ETFs, fostering sustained momentum and attracting further interest and adoption. Conversely, in the bearish scenario, a price drop might induce selling pressure from ETFs and reduced transaction fees, potentially leading to fewer miners securing the network.
This dynamic underscores the ongoing test despite the halving’s predictable occurrence. Now, turning to notable developments from the week:
- Avraham Eisenberg, implicated in the $110 million Mango Markets exploit, has been convicted of commodities fraud, commodities manipulation, and wire fraud. His sentencing is scheduled for July 29.
- Telegram has integrated Tether’s USDT stablecoin into the TON blockchain, facilitating transactions for its vast user base. Telegram CEO Pavel Durov also revealed plans to tokenize stickers available through the app, furthering its experiment with combining centralized and decentralized features.
- Hong Kong has greenlit several spot bitcoin and ether exchange-traded funds, with asset managers poised to launch as soon as later this month. Inflows for these ETFs are expected to be modest initially, given conservative estimates based on market sizes.
