Grayscale’s new ETF product, the Bitcoin Mini Trust has set fees at 0.15%

Grayscale said it will contribute around 10% of GBTC assets to the Mini Fund, some 63,204 bitcoin.

Bitcoin ETF provider Grayscale has provided some details of its spin-off fund, the Bitcoin Mini Trust (BTC), including a more competitive 0.15% fee than the uplisted mothership GBTC product, according to a pro forma financials in its latest filing.

The filing also provides an illustrative example of the amount of Bitcoin {{BTC}} Grayscale will contribute to the mini fund: 63,204 bitcoin, or 10% of existing assets in GBTC, as per the filing. Shares of the BTC trust are to be issued and distributed automatically to holders of GBTC shares. (Pro forma financial statements are projections of future expenses and revenues, based on a company's past experience and future plans.)

Grayscale’s Bitcoin Mini Trust was conceived to offer GBTC investors a lower fee option that’s more competitively in line with other bitcoin ETFs approved back in January.

This spinoff is also considered a non-taxable event for GBTC’s existing shareholders, so those investors will not be expected to pay capital-gains tax to automatically transfer into the new fund. Some early stage GBTC investors with gains in the thousands of percentages would face a significant taxable event to switch to a competitor product with a lower fee.

Grayscale’s GBTC, which charges a relatively high fee of 1.5%, appeared over a decade ago originally offered through a private placement. In mid-2015, shares began trading publicly on an over-the-counter basis. This continued until January 2024 when GBTC uplisted to NYSE Arca as a spot Bitcoin ETF.

Grayscale’s current assets under management stands at around $19.6 billion; its nearest rival, which is BlackRock’s IBIT fund, has grown to just over $17.5 billion.

Despite this being the most anticipated Bitcoin halving yet (at least according to Google search history), it was the launch of the high-profile Bitcoin builder Casey Rodamor’s latest creation – Runes – that turned heads, even among long-time blockchain developers who despise the digital tokens that can be minted on the platform.

Rodamor is known for the release of Ordinals, a protocol that allows people to “inscribe” data on the smallest units of bitcoin (i.e. satoshis) to create highly valued assets on Bitcoin. Ordinals is largely credited for inspiring a renewed developer ecosystem on Bitcoin.

Runes is similar to Ordinals, in that it allows people to “etch” and mint tokens on-chain – the main difference is that ordinals are “non-fungible” (i.e. one-of-a-kind) while Runes will function more like meme coins, which have recently taken crypto markets by storm.

The first Runes project to mint was Rodamor’s own UNCOMMON•GOODS project, which was announced well in advance of the halving, as were many of the projects looking to etch themselves on these highly coveted satoshis.

See also: The Bitcoin Halving Is Here, and With It a Giant Surge in Transaction Fees

Impossible to know in advance, however, is what other projects would be able to find space on these scarce satoshis. There are already quite literally hundreds of Runes projects that are currently being minted and looking for prospective buyers.

About nine blocks after the halving, Runes minters had already paid 78.6 BTC in fees (~$4.95 million) in order to buy the rarest of the rare. This suggests that, like Ordinals, the Runes protocol could be a boon to Bitcoin’s burgeoning fee economy.

What makes a Runes project potentially viable is something of a subjective measure: being an early project to list — like DOG•GO•TO•THE•MOON, which has the honor of being “Rune Number 3” — is one measure. But buyers are also judging projects based on the “quality” of its ticker.

A number of Runes projects were already starting to mint before the halving happened, including DOG•DOG•DOG•DOG•DOG, MEME•ECONOMICS, SHORT•THE•WORLD and PEPE•WIT•HONKERS, including dozens others, according to runebtc.xyz.

Prior to the halving block being mined, prospective buyers in an X Space hosted by Leonidas, a well-regarded Ordinals collector, users and speculators alike were discussing which Runes to mint and trading ticker names.

Among the names dropped were Taproot Wizards, the Ordinals project co-created by Bitcoin OG influencers Eric Wall and Udi Wertheimer, and a project called Satoshi Nakamoto, named after Bitcoin’s creator, which at press time had over 5,000 holders who minted about 19,000 tokens.

Which projects will actually prove to have long term value is hard to judge.

“Yeah, I don't see any good memes, like, I mean, I'm just trying to figure it out,” one trader said. “To be quite frank, I haven’t minted anything yet.”

See also: Runes DEX Secures $2 Million in Seed Investment to Pioneer AMM on Bitcoin

“I’m trying to understand the space in general right now,” someone else responded. “These projects are like early Runes. Do you guys think that these are actually going to be the most valuable ones?”

“I think it depends what happens with them,” someone responded.

Another aspect to consider: how many of the tokens were “pre-mined,” or held in reserve for project creators to potentially release on the market later. Prior to the halving, Leonidas shared guidelines that suggested projects that pre-mine more than 10% of the token supply were “greedy.”

“I think the pre-mines are going to be the ones that win,” one trader said. “Because like, it's so hard to come up with a good meme with a 13 character limit,” he said, referring to the hardcoded naming system Rodamor added to Runes to try to prevent “ticker squatters.”

In time, Runes tickers will be able to list with shorter names. Within three years, there could be Runes projects with three-letter tickers, for instance.

Though it’s unclear how well this strategy will play out. According to data source Ordiscan, one forethinking developer has already blocked off a series of tickers, including ZZZZ (which will be the “first four letter Rune” to mint in two years), ZZ and Z (the first two letter and one letter Runes to mint in three years) and A (the last single character Rune to mint in four years).

In other words, with something so new, it’s hard to determine what to value.

“As everybody is scrambling to figure out what the hell's going on, I want to just take a moment to say it's awesome being here with all of you,” Leonidas told his audience. “This is essentially the start of a new protocol that kicked off about 30 minutes ago. So let's see what happens. I think it's going to be very chaotic.”

Bitcoin {{BTC}} held steady around $63,700 in the aftermath of the cryptocurrency's fourth halving, an event that upends the economics for the miners who power the Bitcoin ecosystem.

BTC recently barely moved from its level right before the 840,000th Bitcoin block was mined just as Saturday began in UTC time. Bitcoin had slumped as low as $59,685 on Friday before rebounding above $65,000.

Read more: Complete coverage of the fourth Bitcoin halving

The halving has historically been a precursor to a rally in the price of bitcoin, with the last one, in May 2020, giving way to a run up from $9,500 to $65,000 during the subsequent year.

But this time, bitcoin has already embarked on a momentous rally to record highs, rising from $15,500 in late 2022 to $73,680, helped by optimism around the approval of spot bitcoin ETFs in the U.S. and then then the ensuing enthusiasm after they began trading in January.

On Thursday, JPMorgan said that it expected bitcoin to drop following the halving as it remained in "overbought conditions" based on the high level of open interest in bitcoin futures. Goldman Sachs added that in order for bitcoin to emulate the success of previous cycles following halving events, macro conditions need to be supportive of risk-taking.

Bitcoin has traded between $59,600 and $73,860 since Feb. 28 with the upside of the range being protected this week alongside the backdrop of rising conflict in Israel, which has had a knock-on effect across all capital markets.

A sell-off on April 12 from $71,000 to $60,000 wiped out $4 billion in open interest from the bitcoin market, according to Coinalyze. The figure across all exchanges excluding CME is $16.1 billion.

The quadrennial event is seen as a momentous occasion in the crypto community.

Various factors may make this halving an event like no other in Bitcoin's history.

Soccer has the World Cup. Athletics and many other sports have the Olympics. Crypto has the Bitcoin halving.

The once-every-four-years bitcoin {{BTC}} reward halving took place at 00:09 UTC on Saturday, when the 840,000th block was added to the Bitcoin blockchain.

The halving, which cuts the reward bitcoin miners receive for adding new blocks by 50%, occurs every 210,000 blocks – in accordance with the original programming when the blockchain's elusive creator, Satoshi Nakamoto, launched it 2009.

This halving was the fourth in Bitcoin's history, with the reward dropping to 3.125 BTC.

For CoinDesk's complete coverage, please see our Bitcoin Halving landing page.

The mining reward is an incentive for entities who contribute computing power to secure Bitcoin. The miner that wins the race to add each new block to the network takes away the mining reward, the amount of which is fixed until it's cut again at the next halving, as programmed by the cryptocurrency's elusive creator, Satoshi Nakamoto.

The quadrennial event is seen as a momentous occasion in the crypto community because it symbolizes bitcoin's original concept as an autonomous, decentralized financial network whose monetary policy is set by code, as opposed to human organizations like governments and central bankers.

Unlike traditional, or fiat, currencies, whose value has historically been eroded by inflation and government printing, bitcoin is designed to be non-inflationary with a maximum total supply of 21 million BTC in circulation. With the halvings every four years, the pace of new issuance of bitcoins reduces over time until the last one is mined, likely sometime in 2140.

Read More: Bitcoin Halving, Explained

Historically, halvings have been followed by surges in bitcoin's price. The thinking is that the fewer new BTC are being produced, the more valuable those already in existence become. This time, the outlook is murky. Some market commentators say the halving is already priced into BTC and, therefore, the immediate effects may be muted. Others see the bitcoin price falling, while yet others have suggested a rally is in store.

The potential effects of this present halving may be impossible to predict due to the profound differences in the Bitcoin landscape compared with the three previous events. Notably, January's long-awaited approval of spot bitcoin exchange-traded funds (ETFs) in the U.S. means greater institutional investment is coming to BTC by orders of magnitude.

Also, following the launch of the Ordinals protocol early last year, there is now much greater activity going on under the hood of Bitcoin, with developments and upgrades to the network potentially bringing far more utility to the notoriously conservative ecosystem.

An Indian citizen pleaded guilty this week to U.S. charges that he created a fake version of Coinbase's website, letting him steal login credentials on the real thing and plunder more than $9.5 million of cryptocurrency from hundreds of victims.

Chirag Tomar, 30, was arrested at the Atlanta airport on Dec. 20, 2023, while visiting family on a travel visa. He was charged with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering. Both carry a maximum sentence of 20 years in prison.

Tomar’s case was first flagged by Seamus Hughes of CourtWatch.

According to court documents filed in the Western District of North Carolina, Tomar and his co-conspirators created a fake version of Coinbase Pro’s website to fool Coinbase customers to fork over their login info. Between at least June 2021 and Tomar’s arrest in late 2023, at least 542 victims were scammed out of their crypto.

Court documents show that the U.S. Secret Service was able to identify Tomar as a member of the crime ring because he used an email account in his real name to communicate with known and unknown co-conspirators in the fraud. He also kept a spreadsheet of his victims and how much had been stolen from each and sent “stolen or fraudulently obtained” identity documents to other email addresses used to open up accounts at Binance, another cryptocurrency exchange.

Between June 2021 and October 2022, Tomar made internet searches for “fake coinbase page,” “coinbase scam,” “scams in the USA,” and “how to take money from coinbase without OTP.”

Tomar used the same email address to apply for his travel visa to the U.S.

Using the proceeds of his fraud, Tomar funded a lavish lifestyle, purchasing Rolex and Audemars Piguet watches, “high-end luxury vehicles such as Lamborghinis and Porches,” and traveling to London, Dubai and Thailand.

Tomar has not yet been sentenced.

The Human Rights Foundation has announced that computer scientist and privacy advocate Hal Finney, who played a role in getting Bitcoin going 15 years ago, will posthumously be the first recipient of an award named in his honor.

This roundup is part of CoinDesk’s “Future of Bitcoin” package.

Fran Finney, his widow, has accepted the inaugural Finney Freedom Prize on Hal’s behalf, including a physical award and monetary prize of 1 bitcoin {{BTC}}. Hal Finney died in 2014 due to complications from amyotrophic lateral sclerosis, or ALS.

HRF Chief Strategy Officer Alex Gladstein said the award is meant to honor those who make vital contributions to Bitcoin.

“Obviously we can't give it to Satoshi. So, beyond that, it's Hal. No one even comes close to his contributions,” Gladstein told CoinDesk in an interview. “He coded until his last days. I mean, he literally contributed to human freedom until his muscles didn't cooperate anymore.”

Read more: Who Is Satoshi Nakamoto?

“Hal would have been thrilled to see how this Bitcoin ecosystem has grown, and to learn that this once-obscure software project is now used by tens of millions of people worldwide,” Fran Finney said in a pre-recorded acceptance speech. “He would be honored to be the first recipient of this award, and humbled to have it be in his name. I feel great privilege and responsibility in accepting the first prize on his behalf.”

The Human Rights Foundation has set aside an additional 32 bitcoin, worth over $2 million at current prices, out of its own treasury to make awards well into the future. “Our view is that in 40 years, it'll probably be the world's largest cash prize,” Gladstein said.

For the next three years, the foundation will name a new laureate on Jan. 10, also known as “Running Bitcoin Day,” or the day Hal Finney posted on Twitter (now X) about becoming the first person besides Satoshi Nakamoto to download the Bitcoin software. After that, the awards will be handed out to coincide with Bitcoin halvings, approximately every four years. (The next one happens in a few hours from press time.)

Read more: This Bitcoin Halving Is Different. But Is It 'Priced In'?

The first four awards, including Finney’s, are meant specifically to retroactively reward those who made the biggest contributions to Bitcoin within the periods between each of the first four halvings: 2009-2012 (Finney), 2012-2016, 2016-2020 and 2020-2024. After that, the prize will go to those who contribute most in the intervening four years.

A “Genesis Committee” of seven individuals – including “The Genesis Book” author Aaron van Wirdum, Africa Bitcoin Conference founder Farida Nabourema, Bitcoin Core dev Gloria Zhao, bitcoin++ and Base58 co-founder Lisa Neigut, Fedi founder Obi Nwosu, Stone Ridge Holdings CEO Ross Stevens and Running Bitcoin Challenge co-founder Vitus Zeller – was picked to lead the nomination process until 2028.

Committee members will then nominate their successor, who will serve a four-year term.

“This is a prize that will outlast us all,” Gladstein said, noting that the last Bitcoin halving will take place sometime in the next century. “Hopefully we can have some kind of intellectual lineage here going through the decades. The first seven are only going to choose somebody who they really feel embodies their ideals so hopefully you get a committee in 100 years that's somewhat reflective of the initial committee.”

Who is Hal Finney?

Even if Hal Finney had never discovered Bitcoin on the Cypherpunk Mailing List, becoming the first person to receive a bitcoin transaction and contribute code to the project, it’s likely he would be remembered by the Bitcoin community for his many contributions to cryptography and his privacy advocacy

A graduate of the California Institute of Technology, Finney began to make contributions to foundational cryptographic communications tool Pretty Good Privacy (better known as PGP) in the early 1990s, before working for the PGP Corp. directly until retirement. The program remains one of the best ways to encrypt online communications.

“The work we are doing here, broadly speaking, is dedicated to this goal of making Big Brother obsolete,” he wrote to a group of cryptographers, at a time when the U.S. government was looking to limit the public’s access to strong encryption.

Finney’s work on PGP led to his interest in digital currencies, which he thought could better protect people’s privacy than the emerging payment options like credit cards that were beginning to dominate (and still dominate) the web. In 2004, Finney created a prototype digital asset that reusable proof-of-work system, which although it didn’t catch on, went on to directly inspire Bitcoin.

See also: Bitcoin and the Rise of the Cypherpunks

Four years later, when Satoshi unveiled the Bitcoin white paper, Finney was one of a few people who took notice. He responded on Satoshi’s announcement post on the cryptography mailing list that he looked forward to seeing how the concept would be developed and was offered early access to the project source code.

Between 2009 and 2013, when Finney announced he was paralyzed on the BitcoinTalk forum, he made several key contributions to the Bitcoin software. Throughout his life he was a frequent marathon runner, alongside his wife Fran. In a 2009 Less Wrong blog post, Finney wrote “my dream is to contribute to open source software projects even from within an immobile body.”

There are some who believe that Finney is Satoshi, or a possible contributor to a group that referred to itself under the collective name. A recent post by Bitcoin OG Jameson Lopp disputes this claim, after reviewing timestamps that show Finney was often probably elsewhere while Satoshi was online. Finney himself denied that he was Satoshi Nakamoto.

“We wanted to do the prize not just to honor Hal’s contributions to Bitcoin, but digital privacy and freedom generally,” Gladstein said. “It is something that is very important to us.”

The whale purchases marked a change in behavior compared to their inaction during previous dips over the past week.

The action perhaps helped bitcoin's rebound to $65,000, marking the $60,000 level as a key support level for bitcoin's price where buyers step in.

Large bitcoin {{BTC}} investors substantially increased their holdings as prices dipped below $60,000 in early Friday's panicky action on the crypto markets ahead of the asset's much-anticipated halving event.

Blockchain analytics firm IntoTheBlock's "large holder netflow" metric shows that Bitcoin addresses holding at least 0.1% of the supply added 19,760 BTC worth over $1.2 billion to their holdings on Friday at an average price of $62,500.

Large holders – often called whales in crypto slang – are major market players who control large amounts of a digital asset and are usually considered to be smart, well-informed investors. Their purchases and sales can have a sizable impact on markets, thus crypto watchers closely follow their behavior to anticipate price movements.

"Bitcoin whales may have finally started buying the dip," IntoTheBlock said in an X post on Friday. "Historically, accumulations by these addresses have often preceded rises in bitcoin's price."

The recent action marks a significant change in whales' behavior compared to earlier this week, when large investors didn't step in to capitalize on weakness, prompting fears about further downside.

The purchases perhaps fomented bitcoin's sharp rebound past $65,000 from its overnight lows of $59,600 as Israel carried out airstrikes in Iran. Prominent crypto trader Skew also pointed out that the recovery was at least partly driven by spot BTC buyers. Recently, BTC settled at around $64,000, up 1% over the past 24 hours.

Read more: Bitcoin Price Bounces as Halving Nears

Zooming out, the largest crypto by market capitalization has been consolidating for the past few weeks, cooling off from record-breaking prices last month ahead of its four-year halving scheduled for April 20 (UTC). The event will cut the reward for miners by half, reducing the issuance of new tokens to circulation.

Prices bounced from around the $60,000 area after sell-offs for the third time in a week, carving out a significant support level where buyers step in to capitalize on lower prices.

"While sellers on the margin appear to be derisking, there has also been opportunistic buying between $60,000-62,000 levels," Coinbase Institutional research analyst David Han said in a Friday report. "We think this directional uncertainty speaks to our thesis of bitcoin’s divergent roles both as a risk and a safe haven asset," he added.

The U.S. Internal Revenue Service (IRS) has previewed what crypto investors' future tax form might look like when it finishes its much-debated rule on how cryptocurrency transactions should be reported to the federal government.

The IRS offered a draft of the 1099-DA form that would be meant to figure out the taxable gains or losses when brokered digital assets change hands. The form reveals the agency will likely have an array of individual token codes that can be filled in, and it includes spaces for wallet addresses and where to find transactions on the relevant blockchain.

"Brokers must report proceeds from (and in some cases, basis for) digital asset dispositions to you and the IRS on Form 1099-DA," according to the instructions included with the form, which shows a 2025 date. "You may be required to recognize gain from these dispositions of digital assets."

This unveiling is preliminary and may still change depending on the final outcome of the tax rule proposed last year. While the establishment of U.S. tax practices for crypto is among the necessary steps toward ridding investors of uncertainty and confusion, cryptocurrency businesses are nervous about how the IRS will identify the digital asset brokers that would need to comply with the new system – potentially including wallet providers, decentralized platforms and payment processors.

This version of the form asks the filer to check a box that describes the type of broker they are: kiosk operator, digital asset payment processor, hosted wallet provider, unhosted wallet provider or "other."

"As expected, the look and feel are similar to the Form 1099-B for reporting sales of traditional financial products," said Jessalyn Dean, vice president of tax information reporting at Ledgible, in an analysis of the form that also noted the IRS has "packed a lot of lines and boxes into this form."

Dean pointed out references to so-called wash sales and that the form provides for transactions that are only recorded internally by crypto firms. She contended that at least one of the boxes on non-deductible losses would need more guidance on how it works.

Miles Fuller, the head of government solutions at TaxBit, welcomed the "long-awaited" draft in a posting on LinkedIn.

"The form also carries through the requirements in the current draft regulations that wallet addresses and transactions hashes will be provided where relevant," he wrote. "This was another point that received heavy feedback for a few different reasons. I am curious if this will change as the final regulations are released."

The IRS is inviting public comments about the draft form. It remains unclear when the tax agency will produce a final rule, though the 2025 form suggests a completion at some point this year. Read More: New Form 1099-DA: What it Means for Digital Asset Brokers and Their Customers

In 2023, we said goodbye to Crypto Winter. Now, it’s time to say hello to a new era of DeFi Summer, this time centering on the most buzzworthy yet also durable trends: Bitcoin. With Ordinals proving demand, exchange-traded fundes (ETFs) providing access and Bitcoin scaling solutions emerging, 2024 is set to unlock the ~$1 trillion asset class in ways previously unseen.

This op-ed is part of CoinDesk’s “Future of Bitcoin” package.

The initial decentralized finance (DeFi) revolution in 2020 centered around smart contracts unleashing blockchain utility beyond the simple maintenance of a ledger and asset. It transformed the technology into a platform for vast, interoperable financial ecosystems. On the Ethereum Virtual Machine (EVM), people worldwide could essentially become their own banks, accessing hundreds of interoperable financial applications. This evolution offered a promising look into a future of finance governed by immutable code rather than fickle human beings.

As DeFi Summer unfolded, the technology and enthusiasm fueling DeFi extended to non-financial blockchain applications, notably non-fungible tokens (NFTs). Blockchains demonstrated their versatility by hosting not only financial systems but also becoming hubs for art, culture and gaming. Spurred by the constant inquiry of "what's next," blockchain technology seemingly expanded into every conceivable use-case, often stretching beyond its core utility and practicality at the height of the craze.

Ultimately, the initial buzz about NFTs and blockchain's expansion turned to fear during the 2022 crypto winter, although this wouldn’t be the end for NFTs. 2023 witnessed a revival in the blockchain enthusiasm, thanks in part to NFTs making a strong comeback, this time taking the form of Ordinals on Bitcoin. Similar to how DeFi Summer revealed new blockchain capabilities, Ordinals and BRC20 tokens showcased Bitcoin's potential, sparking excitement about the future possibilities of blockchain technology.

See also: With COMP Below $100, a Look Back at the 'DeFi Summer'

The question arose: If Bitcoin could support NFTs and tokens, what other applications could its unparalleled security and popularity cover?

Unlocking BTCFi

In retrospect, the NFT craze of 2021 can be interpreted as the fading-out of a hype cycle. While valuable, the technology was more a reverberation from DeFi’s big technological splash. In contrast, the current enthusiasm around Ordinals feels like the fading-in of a new cycle, representing newly discovered demand that will undoubtedly have downstream effects. This isn't merely a repetition of past utility; it's an intriguing development whose potential is just beginning to unfold.

Prior to the advent of Ordinals and BRC-20, there was a widespread belief that Bitcoin served a solely passive role within the blockchain ecosystem, offering little beyond basic asset functionality. This perception has shifted dramatically. Thanks to a number of significant advancements from a usability standpoint, Bitcoin is emerging as a critical security-provider for DeFi and as an asset with newfound utility and interoperability.

The future of Bitcoin DeFi involves bringing the Bitcoin network's security to EVM-compatible smart contracts. Leading EVM-compatible Bitcoin scaling solutions are innovating methods to incentivize bitcoin miners to secure both the BTC asset and smart contracts simultaneously but independently. Ensuring miners, and consequently bitcoin itself, gain value is essential for expanding the Bitcoin network beyond safeguarding just the BTC asset.

Unlocking the BTC asset

Historically, BTC has served mainly as a passive store of value, not actively involved in DeFi security or commerce. Yet, much like ETH's dual role in securing Ethereum and serving as currency, bitcoin has the potential to evolve into a versatile asset beyond the base Bitcoin chain. The introduction of Bitcoin staking in 2024 is set to transform BTC from a passive to a rewards-generating asset, marking a significant shift in its utility.

See also: DeFi Has a Risk Problem and It's Time to Solve It

Once DeFi ecosystems become massively aligned with both bitcoin miners and bitcoin holders/stakers, those ecosystems become the greatest and safest platforms for "BTCFi." As advancements such as HTLC atomic swaps and innovative bridging solutions overcome technical hurdles, BTC is set to pour into DeFi protocols. This influx will unlock extraordinary utility for the world's premier and most trusted blockchain-based asset.

Building bitcoin DeFi together

Bitcoin is leading the creative front of blockchain innovation for the first time in years. Now that the Bitcoin base layer is widely recognized as permanently secure, it’s time to build solutions to bring it to new heights. Given that the BTC asset is the definitive self-sovereign asset, it only makes sense that the Bitcoin network should be the core protector of the future of self-sovereign decentralized finance.

We, the Bitcoin community, are acutely aware of the vast potential lying dormant within our network and its currency. It's time to step forward and unlock this potential, fostering innovations that empower Bitcoin, DeFi and the pursuit of financial independence worldwide.

Google searches for the term “Bitcoin halving” have hit an all-time high, surpassing the previous record set during the last halving in May 2020. According to Google Trends data, which uses a 100 point scale to determine the relative popularity of keyphrases, there is more interest than ever in the Bitcoin network halving.

This op-ed is part of CoinDesk’s “Future of Bitcoin” package.

Interest in the term has steadily ramped up since the start of 2024, alongside search interest in the phrase “Bitcoin” (which is still below its 2017 peak in terms of search interest). The surge in interest this month is notable considering bitcoin’s {{BTC}} recent rally has stalled out, including turbulence this week, which saw it drop from a high around $70,000 last Friday to $63,000 today.

See also: This Bitcoin Halving Is Different. But Is It 'Priced In'?

Less than 60 blocks away, the fourth Bitcoin halving will see the number of bitcoin paid out as a block reward to miners cut in half from the current 6.25 BTC to 3.125 BTC. This particular halving is notable for a number of reasons, including the resurging interest in Bitcoin as a developer ecosystem, the onshoring of the U.S. mining industry following China’s ban and the relatively recent launch of spot bitcoin ETFs that helped ignite a (now ebbing) market rally.

“This is the first halving in which major U.S. asset managers are educating on Bitcoin, and there’s no better Bitcoin education than learning about the halving. It’s a narrative event first – a quadrennial market moment – and a supply event second, though I think both aspects will be impactful,” Galaxy Digital head of research Alex Thorn told CoinDesk via email.

Though it's not just fund managers having fun. As Decrypt initially reported, search frequency for “Bitcoin halving” surpassed the cannabis culture meme number “420” for the first time in its history. This is especially notable because the halving was initially scheduled to coincide with the April 20 holiday known for its cannabis-oriented celebrations, though is now likely to occur Friday evening.

See also: What Bitcoiners Are Saying About the Upcoming Bitcoin Halving

I’ve always tended to be heterodox in my beliefs, my social attitudes and the way I reason outside of scholarly consensus.

Patrick Dugan is the founder of the Omni Foundation, CEO of TradeLayer and coiner of the term "crypto-dollarization".

This article is part of CoinDesk’s “Future of Bitcoin” package.

It was about 11 years ago that I sent the wire to Mt. Gox to purchase my first bitcoins {{BTC}}. A few months later I relied on those coins to survive getting robbed of all my items and cash in capital controlled Argentina. LocalBitcoins was my realization of the reality of Bitcoin as world-changing technology, and my survival tool in an emergency.

Then after getting into arbitrage trading and dipping into the bull market of 2013, I found work with the Mastercoin Foundation, funded by the first initial coin offering (ICO). In March 2014 I saw the debate over reactivating OP_Return as a soft-fork, but with a lower, 40 byte limit — the argument was that a higher threshold would enable spam.

I saw the vehement passion by which the byte-size conservatives argued, and found it perplexing. Little did I know that this debate over whether the limit should be 40 bytes versus 80 bytes would continue to snowball into a whole ideological sectarian rift in the Bitcoin community.

When I got into crypto, it was all about, you know, being able to control your own money, whether that means surviving being robbed of all your cash in a country with capital controls, buying LSD from a foreign chemist or any number of things synonymous with righteous resistance against tyranny and fostering human freedom and thriving.

See also: Designer Drug Markets Get Boost From Crypto

But what resulted in the intervening years has been infighting. In short, the Bitcoin community, since the so-called “Blocksize Wars,” has seen fierce opposition between the pro-data people and the people who want Bitcoin to be a data-light form of digital gold.

See also: What Is Bitcoin Meant to Hedge?

Meanwhile, I dreamed a dream of decentralized derivatives backing synthetic dollars without any banking, earning yield off of basis trades when bitcoin price trends lead to futures contango (when longer-dated futures have a higher premium so there’s time value in being long bitcoin and short futures).

To quote a famous man:

What

Here’s what happened:

A number of U.S., citizens who transacted sums as small as $1,500 on LocalBitcoins were arrested, serving jail sentences for peer to peer trading

LocalBitcoins and many similar platforms were shut down

BlackRock made us an offer we couldn’t refuse: Finally putting BTC as a ticker mainstream American baby boomers can purchase with their IRA accounts, causing our USD-denominated wealth to go up

U.S. resident participation in most crypto activities became so problematic through tax enforcement complications, know-your-customer headaches and increasingly draconian penalties (such as the i6050 $10,000 threshold penalty for sending someone BTC or any other coin), meaning U.S. bitcoiners became predominantly focused on holding and not using BTC

Stablecoins emerged as the de facto blockchain-based way to transfer value (which started on the Mastercoin protocol, but due to the fees, quickly migrated to Ethereum). USDT on Tron is the category winner.

The U.S. Foreign Accounts Tax Control Act or the OECD’s Common Reporting Standards laid a brush fire to the wildcat offshore banking of the 1990s and early 2000s, leaving us with a world closer to global financial governance.

The Lightning Network, an attempt to create a flexible, low-cost way to spend BTC, found itself constrained with the irreducible on-chain cost of opening new channels, which limited any routing abstractions to try and fix the problem.

The first major upgrade of Bitcoin network that was acceptable to political consensus since the 2017 Segwit upgrade, Taproot, got used as a work-around for the 80 byte OP_Return limit, leading to a renewed burst of NFT-trading activity around Bitcoin, driving up transaction fees. (This has rankled conservative bitcoiners who now want to avert any future upgrade for fear of similar ingenuity.)

Jeremy Rubin, a prominent Bitcoin developer with an alternative way to scale the network, has become the subject of insults and scrutiny as possible agent provocateur for the supposed crime of making a moderately conservative upgrade meant to make Bitcoin more usable, mostly at his own expense as well as the expense of years of free labor for the team.

BitVM by Robin Linus is the new Lightning; it’s like making a virtual machine out of switches in Minecraft, facilitating peg-in-peg-out without upgrading the core protocol. Jeremy Rubin has volunteered efforts on it such as flattening arrays. There is much debate about its limitations despite these herculean R&D efforts to make a path around the Holy Mountain of an ossified protocol (instead of drilling a tunnel through with a hard fork upgrade).

In other words, in the past 15 years that Bitcoin has been around, a number of attempts designed to make the first and most important blockchain a suitable platform to develop on have failed or been resisted by the community. Did the “number go up”? Yes, yes it did. But is Bitcoin any better off? It’s hard to say.

The time has come to honestly ask: did we fail?

The Bitcoin community is not significantly closer to having a peer-to-peer medium of exchange reality where access to global liquidity and freedom of commercial association is a universally ensconced human right. And our *enemies*, people who hate human freedom, are actually closer to attaining the Carrol Quigley dream of a global college of ordoliberal consensus (i.e. a New World Orderrrr).

We’re still busy arguing about ways to accomplish things that really could be done very easily with a single fork, but the issue is political and a preponderance of precautionary principle precipitating our placid perversions.

Let me put it another way: it’s super weird when an engineering culture of crypto-anarchists develops anti-intellectualism.

Having said that, I’ve been humbled by my own business trip-ups trying to make a work-around to Bitcoin’s inbuilt limitations. After years of experimenting on Bitcoin and having to rewrite my core software due to an avalanche of tech debt trying to cross-compile with the whole Bitcoin C++ project, and many years of boom and bust, I’m finally shipping. And I’m shipping on Litecoin first. Because, hey, Litecoiners are nice people. They, like me, have been humbled by pain.

See also: Tether Stops Support for Bitcoin Layer Omni

Being humbled by pain did another things to me. It forced me to start practicing gratitude and that led me back to God, first in a reconstructionist sort of heretical Catholicism or revisionist protestant Christianity, and then to a reconstructionist, Quran-centric Sufi Islam. And one thing I learned from studying religion the last two years (building in the bear market, you might say) is that human beings love to be sectarian. We love it! It’s like, our favorite thing.

Asserting one’s moral superiority over people who are otherwise your ideological brothers based on invented distinctions is one of the “finer things” in life. Repudiating human-made distinctions that distract from the purity of God’s principles is a major theme in the Qur’an (6:159, 30:32,42:14) and Gospels (Mark 7:5-8, Luke 9:46-56). It’s clear that us bitcoiners have fallen into the same tendency, because to err is human, but to forgive is divine mah Brothers!

What’s happening in the state of the Bitcoin Ummah in this, the year of our Lord 2024, the month of April, the 4th halving, is we’re starting to appreciate that we’re too successful to fully succeed at sabotaging ourselves with endless sectarianism. The outspoken voices of a purist minority are being eclipsed by the onslaught of new users and capital inflow, and the unrelenting march of innovation by a few brilliant weirdos who are doing things with zero-knowledge proofs, embedding DeFi with work-arounds, and other hacks, to force Bitcoin to work as a medium of exchange that non-hodlers can utilize.

The time where social media rhetoric dominated Bitcoin discourse is over, the time where usage demonstrates the trade-offs of competing technical solutions has dawned.

Crypto markets will be driven by macro factors in the short term, Coinbase said.

Previous halvings were accompanied by other cryptocurrency ecosystem catalysts that acted as tailwinds.

The growth of investors using bitcoin as a macro hedge has reduced volatility this cycle, the report said.

The direction of digital asset markets following the bitcoin {{BTC}} halving is more likely to be driven by macroeconomic factors even as crypto fundamentals remain strong, Coinbase (COIN) said in a research report on Thursday.

“These factors are largely exogenous to crypto and include increased geopolitical tensions, higher for longer rates, reflation, and rising national debts,” analyst David Han wrote.

The recent elevated correlation of altcoins to bitcoin underlines this, Han wrote, “indicating BTC’s anchor role in the space even as BTC firms its position as a macro asset.”

While previous halvings have historically kickstarted a bull market, “these cyclical runups have often been accompanied by other ecosystem catalysts that provide additional tailwinds,” the report said.

The quadrennial reward halving slows the rate of growth in bitcoin supply by 50% and is expected to occur late this evening or early tomorrow UTC.

While crypto has been largely been viewed as a “risk on” asset class, Coinbase says “bitcoin’s continued resilience and the approval of spot exchange-traded funds (ETFs) has created a bifurcated pool of investors (for bitcoin in particular) – one which sees bitcoin as a purely speculative asset, and another that treats bitcoin as a ‘digital gold’ and hedge against geopolitical risk.”

The growth of investors that use bitcoin as a macro hedge partly explains the reduced magnitude of pullbacks this cycle, the report added.

Wall Street giant Goldman Sachs (GS) expressed similar sentiment in a report last week. It said “caution should be taken against extrapolating the past cycles and the impact of halving, given the prevailing macro conditions.”

Read more: Goldman Cautions Against Extrapolating Previous Bitcoin Halving Cycles for Price Predictions

This article originally appeared in First Mover, CoinDesk’s daily newsletter, putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.

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Bitcoin recovered slightly as its halving event approaches, adding 5% over 24 hours. Ether also rose, rising 4% to $3,000. According to Laurent Kssis, a crypto ETP specialist at CEC Capital, the uptick for bitcoin will continue for U.S. markets and then readjust and push back to earlier levels. Bitcoin reached a weekly low of $58,800 this week and is currently approaching the $65,000 mark. The halving is predicted to take place late Friday or early Saturday UTC. The quadrennial event slows the rate of growth in bitcoin supply by 50%. Altcoins also gained, with dogwifhat (WIF) jumping 18%, Ethena Labs’ ENA 16% and Sei Networks’ SEI by 14%.

U.S.-based spot bitcoin (BTC) exchange-traded funds (ETFs) registered outflows totaling $4.3 million on Thursday, extending a four-day run of withdrawals ahead of the supposedly bullish mining-reward halving. Since April 12, the ETFs have witnessed a cumulative net outflow of over $319 million, with Grayscale's GBTC accounting for a large share of the withdrawals, provisional data published by Farside Investors showed. On Thursday, GBTC lost $90 million in outflows, which was partially offset by inflows into Fidelity's FBTC and BlackRock's IBIT. The Grayscale ETF has experienced outflows since day one for several reasons, including the fund's relatively costly fees. So, while GBTC outflows may not be a cause for concern, the recent slower inflows into other ETFs might be.

Cryptocurrency exchange Kraken is acquiring TradeStation Crypto, the digital asset-focused division of online brokerage TradeStation, to expand its regulatory licensing in the U.S. "We can confirm Kraken has recently purchased TradeStation's crypto business," a Kraken spokesperson said via email. "The transaction is part of our efforts to accelerate our U.S. presence and will unlock further growth and new product opportunities for Kraken in the U.S." The company declined to disclose the amount paid. The takeover hasn't previously been disclosed publicly. Florida-based TradeStation Crypto has acquired money transmitter and other types of regulatory licenses in most U.S. states over the past few years.

Chart of the Day

The chart shows changes in prices for bitcoin perpetual futures on Binance and aggregate market-wide open interest (lower pane) over the past 24 hours.

As perpetuals recovered from Asian session lows, open interest declined.

The divergence indicates that the price recovery was partly fueled by a short squeeze.

Source: Velo Data

Trending Posts

Bitcoin Miners Are Better Positioned for the Halving This Time Round: Benchmark

Chia Network Makes Progress Toward an IPO, CEO Says

This Bitcoin Halving Is Different. But Is It 'Priced In'?

Tether, the company behind the $108 billion market cap USDT, plans to issue its dollar-pegged and gold-backed (XAUT) stablecoins natively on The Open Network (TON), a blockchain adjacent to messaging app Telegram, according to listings on the company's transparency page.

TON is a decentralized layer-1 network launched by Telegram but operating independently since the company abandoned its development due to regulatory concerns. The ecosystem has seen rapid growth lately with incentives for onboarding Telegram users, boosting the number of monthly active addresses to over 1.7 million from less than 100,000 six months ago, according to blockchain data by Tonstat. Telegram also recently switched to the network's native token, toncoin (TON), from euros as a payment for its advertisement platform.

The U.S. spot ETFs lost $4.3 million in outflows on Thursday, taking the five-day tally to over $319 million.

GBTC again led the outflows, while inflows into BlackRock's IBIT continued to slow.

The U.S.-based spot bitcoin {{BTC}} exchange-traded funds (ETFs) registered cumulative outflows of $4.3 million on Thursday, extending the four-day run of withdrawals ahead of the supposedly bullish mining reward halving.

Since April 12, the ETFs have witnessed a total net outflow of over $319 million, with Grayscale's GBTC accounting for a large share of the withdrawals, provisional data published by Farside Investors showed.

For instance, on Thursday, GBTC alone saw a significant loss of $90 million in outflows, which was partially offset by inflows into Fidelity's FBTC and BlackRock's IBIT.

The Grayscale ETF has been losing money since day one for several reasons, including the fund's relatively costly fee structure. So, GBTC outflows may not be a cause for concern, but the recent slower inflows into other ETFs might be.

BlackRock's IBIT attracted just $18.8 million on Thursday, down 93% from the monthly high of $308.8 million on April 5.

"Key liquidity drivers, such as stablecoin growth and US-listed Bitcoin ETF inflows, have slowed down - as we have mentioned for several weeks. ETF flows peaked on March 12, and four consecutive days of net outflows have recently been seen. Demand for US-listed Bitcoin ETFs appears saturated, as even a 10-15% decline in Bitcoin prices has not increased net inflows," Matrixport said in a market update early Friday.

Bitcoin changed hands at $64,700 at press time, down over 13% from the record highs above $73,500 last month, CoinDesk data show.

The pullback could be attributed to several factors, including U.S. tax payments, the dwindling probability of the Fed rate cuts, and Iran-Israel tensions.

"The geopolitical risk in the Middle East could have been a qualified event to allocate into Bitcoin, but prices traded lower instead of up. This was a real test in cementing Bitcoin as a risk-off asset—unfortunately, Bitcoin somewhat failed as its price stagnated and sold off," Matrixport added.

Late Friday, Bitcoin's blockchain is set to halve per block coin emission to 3.125 BTC from 6.25 BTC, reducing the pace of supply expansion by 50%. Historically, halvings have presaged major rallies, though the magnitude and duration of uptrends have not been consistent.

The consensus in the crypto community is that the impending halving will put cryptocurrency on a long-term bullish path. However, several observers, including Goldman Sachs and JPMorgan, have suggested otherwise, with the later signaling the potential for deeper price correction after the halving.

Miners are better positioned for this halving due to the large gains in bitcoin in the last six months, the report said.

If history repeats itself, bitcoin will enjoy a strong rally after the event, the broker said.

A potential increase in network fees could offset the impact of reduced rewards, Benchmark noted.

Crypto miners are the group most affected by bitcoin's {{BTC}} reward halving, and they are better positioned this time round due to the cryptocurrency's gains in the past six months, broker Benchmark said in a research report on Thursday.

The largest cryptocurrency by market value rallied about 140% in the past two quarters, while ether {{ETH}}, the second-largest, added 85%, CoinDesk Indices data show. The CoinDesk 20 Index, a measure of the broader crypto market, gained 115%.

The quadrennial event slows the rate of growth in bitcoin supply by 50% and is expected to occur late this evening or early tomorrow UTC.

Benchmark cited Haris Basit, the chief strategy officer of bitcoin miner Bitdeer Technologies (BTDR), who said the recent increase in the price of BTC could bail out many of the Bitcoin network’s less-efficient miners in the near-term.

Given bitcoin’s recent outperformance, the “role of the halving in driving the retirement of inefficient mining rigs and reducing the network hashrate would be much less dramatic than it would have been absent the rally,” Basit said at a Benchmark-hosted event.

“Most of the publicly traded bitcoin miners have initiated or announced plans to increase their electricity and hashrate capacities as a means of adjusting to their reduced revenue and gross profit profiles,” Benchmark analyst Mark Palmer wrote, noting that due to uncertainty around the halving nearly all of the listed miners’ stocks are down year-to-date despite a 46% rally in bitcoin in the same period.

“The impact of the halving on bitcoin miners’ economics could be more offset over time if history repeats and a strong rally in the price of the cryptocurrency occurs during the months following the event,” Palmer wrote.

The broker noted that a potential increase in network fees could also help to mitigate the impact of reduced block rewards.

The halving’s effect on the cryptocurrency’s price “could be magnified by the concurrent demand shock created by the emergence of spot bitcoin exchange-traded funds (ETFs) following their approval in the U.S. in January,” the report said. “We expect the inflows into spot bitcoin ETFs to grow dramatically once institutions begin to invest in them in earnest.”

Read more: Bitcoin Halving Partially Priced In With No Big Rally Expected Afterward: Deutsche Bank

Traders on Polymarket now put the probability of the Fed holding rates steady in 2024 at 32%, compared to 7% in March.

Traditional markets have scaled back expectations to two 25 basis points rate cuts from six in early January.

The probability that the U.S. Federal Reserve (Fed) will keep interest rates unchanged this year is rising.

Betters on blockchain-based betting site Polymarket now see a 32% chance of the Fed keeping the benchmark interest rate steady between 5.2% and 5.5% by the end of the year. That’s a significant change from the 7% probability seen nearly a month ago.

Meanwhile, punters see a 27% probability of a 25 basis points (bps) rate cut.

The hawkish shift in the market sentiment could dampen the demand for risk assets, including cryptocurrencies and technology stocks. According to some analysts, bitcoin’s {{BTC}} surge to record highs above $73,000 in the first quarter was primarily fueled by the anticipation of swift interest rate cuts.

The uptrend in the leading cryptocurrency by market value has stalled since mid-March, with prices trading between $60,000 and $70,000.

Hawkish pricing on Polymarket is consistent with traditional markets, where traders now see just two 25 basis points rate cuts in 2024 versus six in early January. Bank of America recently pushed out the timing of the first Fed rate cut to December from June, while Societe Generale said the central bank would not cut rates until 2025.

No urgency to cut rates

A few weeks ago, markets and policymakers were convinced that inflation would continue to cool in the coming months, allowing the Fed to cut rates rapidly in the year’s second half.

However, the latest data, particularly March’s strong jobs report and hotter-than-expected inflation print, which showed a third straight monthly acceleration in the cost of living, has weakened the case for immediate rate cuts.

“We know that there is no traditional justification for U.S. rate cuts in the short term. Employment is strong, retail sales are beating expectations, Q1 GDP is expected to be not much lower than Q4, and inflation is proving stubborn. Even Fed Chair Powell, yes, he who less than four months ago told us that cuts were imminent, is now suggesting that they may hold rates high for longer than previously anticipated,” Noelle Acheson, author of Crypto Is Macro Now newsletter, said in Wednesday’s edition.

Federal Reserve Chairman Jerome Powell said Tuesday that inflation has returned to the U.S. economy, indicating that rate cuts may not happen any time soon.

On Thursday, New York Fed President John Williams joined the hawkish bandwagon, saying, “I definitely don’t feel urgency to cut interest rates” given the strength of the economy."

“I think eventually...interest rates will need to be lower at some point, but the timing of that is driven by the economy,” Williams said at the Semafor’s World Economy Summit held in Washington.

Atlanta Fed President Raphael Bostic said he is comfortable “being patient,” hinting that the end of the year is the likely timing for the first rate cut.

San Francisco Fed President Mary Daly echoed a similar sentiment Monday, saying, “The worst thing to do is act urgently when urgency is not required.”

{{BTC}} fell 5%, dipping below $60,000 before quickly recovering to about that level, as Israel hit back against Iran for a missile strike last week.

ABC News first reported that Israel had launched a retaliatory strike against Iran Friday morning Hong Kong time. CNN quoted local media as saying that various military bases and airfields in the country have been hit by missiles.

Ether {{ETH}} is also down 3.45%, according to CoinDesk Indices data, trading at $2,800 on the news.

PAXG, a tokenized version of gold run by Paxos, is up nearly 3%, according to market data.

March Zheng, a managing partner at Bizantine Capital, said that the next threshold for bitcoin is $55,000, should market turmoil continue.

"If there is a panic sell for bitcoin due to war-related news, it would still be a good buying opportunity," added Jun-Young Heo, a derivatives trader at Presto said in a Telegram message.

Major stock indices in Asia are also down, with Hong Kong's Hang Seng index down 3.5%, Japan's Nikkei 225 down 6.5%, and Taiwan's TAIEX down 5%.

This year’s halving — the quadrennial slashing of the amount of new bitcoin {{BTC}} entering into circulation — may be the most important since the first one around 12 years ago. And yet, despite intense interest in the event, its price impact may be more muted this year than previous halvings. Recently launched protocols, like Ordinals, and an increasingly robust mining sector, mean the effect could be relatively soft.

This article is part of CoinDesk’s “Future of Bitcoin” package.

The Bitcoin halving, expected to take place late Friday night or early Saturday (April 20), comes with heightened expectations. In each previous case so far, the halving preceded massive sector-wide rallies. There is an ongoing debate whether the halving is “priced in,” or whether the reduced amount of bitcoin entering into circulation (this time dropping from around 900 BTC per day to 450 BTC) will create a kind of supply shock that will drive prices up (assuming demand for bitcoin remains constant or increases).

There are two economic theories that explain this debate. On one side are those who believe the halving is priced in believe the efficient market theory. They say because the event is known in advance, and everyone shares the same information, it is impossible that bitcoin is currently undervalued. On the other side are those who point to the historic four-year boom and bust cycle in crypto and/or the aforementioned supply-and-demand constraints.

See also: What Bitcoiners Are Saying About the Upcoming Bitcoin Halving

Whatever theory you believe, it’s worth noting that this Bitcoin halving is already markedly different. For one, it’s the first time in Bitcoin history that bitcoin’s price has increased before the event. That’s largely because of the launch of nearly a dozen spot bitcoin exchange-traded funds in the U.S., which have been vacuuming up bitcoin at unprecedented rates. BlackRock’s bitcoin fund, for instance, has the fifth-fastest inflows of any ETF so far this year.

“There’s more work to do, but the industry has made significant progress in making bitcoin more accessible and easier to use since 2020,” Miles Suter, Bitcoin product lead at Cash App, told CoinDesk in an email. “While the recent rally has been led by institutional investors, with past halvings we’ve seen a positive sentiment shift in the market that attracts new retail traders; I think the cycle will repeat itself.”

What’s different? The institutions

The institutionalization of bitcoin has another element over and above changing the kinds of buyers of bitcoin (or the way they enter the market): It also serves to legitimize the sector. In previous years, the biggest-name buyers of bitcoin were Michael Saylor’s relatively unknown software company MicroStrategy, known bitcoin fan Jack Dorsey’s Block and Elon Musk’s Tesla, which partially walked back its commitment due to environmental concerns.

ETFs changed that forever. This isn’t to suggest that Wall Street doesn’t have its detractors, but it is significant that firms like BlackRock, Fidelity, Franklin Templeton, VanEck and WisdomTree were all clamoring to be first to market in offering a traditional onramp into this nascent digital economy. Bitcoin, once thought to be the Wild West, is becoming normalized — and no one is quite sure what is on the other side.

See also: Bitcoin ETFs Are Driving a Spot Multiplier Effect

“The people, institutions and governments that matter in the big picture are only *just beginning* to wake up to Bitcoin,” Lane Rettig, founder of SpaceMesh and former Ethereum developer, said. “Yes, this process takes a painfully long time, longer than we expect or would like - it's like a dragon slowly awakening, and right now it's just begun to stir.”

It was a point echoed by Nelson Rosario of Rosario Tech Law, who views the halving as just the latest thing to drive attention to Bitcoin. “I think the questions I've seen around this halving somewhat miss the point. The fact is Bitcoin is at all-time high levels. It is a semi-regular news story in the financial press, and yet mass adoption still feels years away,” he said.

Macroeconomic factors

Indeed, analysts at both JPMorgan and Goldman Sachs this week published reports dampening the idea that the halving will bring in new buyers. A rallying market leading into the halving may be a way to generate buzz, but it may have also “pulled forward” a portion of “the typical post-halving rally,” JPMorgan analysts Reginald Smith and Charles Pearce wrote.

More importantly, macroeconomic conditions in 2024 are completely different than during the preceding decade of low interest rates and low inflation. Goldman's Fixed Income, Currencies and Commodities as well as Equities teams wrote that the higher interest rates today may make high risk investments like crypto less attractive.

It’s a point bolstered by BTC’s performance this week following news the Federal Reserve is reversing course from lower interest rates, which would have brought liquidity into the economy. Price predictions from market analysts vary wildly, with some saying bitcoin could fall to as low as $40,000 post halving or rally above $150,000 by the end of the year.

See also: Bitcoin Rebounds as $150K Target for 2024 Comes in View

Pseudonymous trader Poordart gave a “primitive calculation” adding to the idea that bitcoin could fall following the halving. “Assuming miners sell all mined bitcoin eventually, reducing the average daily number of bitcoin mined from 900 to 450 ($54 million to $27 million at current prices) should have some effect — $189m inflow per week less required just to keep price stable,” he told CoinDesk.

Bitcoin’s 50% price gains this year seem to support the idea that people are willing to take risks — though that doesn’t mean traders shouldn’t proceed with caution. To some extent, the stakes of this halving are even more unclear than ever due to these institutionalization and macroeconomic trends, with some concerned that the halving distracts from the ultimate mission of Bitcoin.

"It is an odd thing to have to treat very, very human-made events as if they are acts of nature or God,” Nathan Schneider, professor of media studies at the University of Colorado Boulder and author of “Governable Spaces: Democratic Design for Online Life.” “I long for the day when network-native economies are designed to serve human flourishing, not arbitrary parameters in code."

Others, like Sarah Meyohas, creator of Bitchcoin and recent Satoshi Nakamoto inscription and hologram series, sees the halving as a symbol of Bitcoin’s resilience. “As we approach Bitcoin's halving, I am moved by the notion that a few people can shape the future of an entire generation through ideas alone.”

How the halving will impact bitcoin miners

A mix of factors — including halving the block reward reward, higher costs, cautious investors and an increasingly crowded mining sector — could be a harsh reality for bitcoin miners after the halving ramps up competition to find the next block.

Historically, the halving has been a boon for the price of bitcoin, helping miners reap a fat profit margin. However, this time, it's different as publicly-traded and private bitcoin miners will have to work harder not just to mine the next block but also to convince the investors and the markets to have faith in their ability to make money.

Heading into this halving, miners are greeted with a cautious tone from investors. For instance, the stocks mining firms Marathon Digital, Hut 8 and Riot Platforms are down roughly 33%, 35% and 46%, respectively, this year. The risk associated with bitcoin mining is seen as greater than alternative mainstream ways to get exposure to crypto, including spot bitcoin ETFs, equities like Coinbase (COIN) and the broad based CoinDesk 20 index, which are less volatile.

Read more: Bitcoin Soared to an All-Time High. So Why Aren't Miners Blasting Off, Too?

To be able to survive and thrive after this halving, miners will need to be efficient, cash flow generating and have proper treasury management in place, CryptoQuant CEO Ki Young Ju wrote. He predicts that even if bitcoin remains at the $60,000 price level the current crop of mining machines would become unprofitable to run for many firms — leading to a wave of bankruptcies.

Unless they are able to quickly deploy the latest generation of more efficient machines, Ju said that bitcoin’s price will need to rise to around $80,000 for miners to remain profitable using Bitmain's S19 XP mining machines, the most commonly utilized miners by U.S. companies.

Miners have already started to replace their older-generation machines with newer ASICs. However, having the latest technology may not be enough to appease investors. Miners must prove they can make money by deploying capital efficiently, cutting costs, finding cheaper sources of power and generating positive cash flow for shareholders.

For profitable firms, the post-halving landscape may become a season for mergers and acquisitions. Firms like Galaxy Digital, with its Helios mining farm, the largest liquid-cooled mine in the Northeast, are already buying up less efficient machines as the cheap cost of electricity in West Texas makes it profitable to run outdated chips.

It’s not all doom and gloom. Increasingly, transaction fees are becoming a significant contributor to miners. Historically, miners earned lion's shares of profit from the block rewards. However, with the increasing ways to use the Bitcoin blockchain — most notably through the Ordinals protocol — miners are taking in more through increased fees.

Another option, which some miners have already started to include in their business plan, is to diversify into other sources of revenue, such as repurposing existing data centers to host computing resources for artificial intelligence or cloud computing.

Read more: Bitcoin Halving Is a ‘Show Me the Money’ Moment for Miners

While others see the drop in revenues as potentially existential for miners, some experts think that the effects will be relatively muted compared to prior years. Some, like Colin Harper, researcher and writer for Luxor Technology’s Hashrate Index, thinks that this could be the first year that there is no dip in Bitcoin's hashrate, or the amount of energy contributed to network security, because prices have remained so high.

"Mining margins won't be as good after the halving as they are now, obviously, but they won't be horrendous," Colin Harper, researcher and writer for Luxor Technology’s Hashrate Index, told CoinDesk. "And if the new Runes fungible token protocol makes a significant impact on transaction fees, then margins will be healthy enough to keep miners with higher costs online for longer than not."

Launch of Runes

As mentioned, NFT-like inscriptions, made possible by the launch of the Ordinals protocol, have changed the game for Bitcoin. Not only has it shifted the economic landscape for miners, but it's also renewed developer excitement in the first cryptocurrency, which in recent years was losing out to chains like Ethereum and Solana.

This halving will also see the launch of the Runes protocol, created by Ordinals creator Casey Rodarmor. The system, which will allow tokens to be created, minted and transferred on Bitcoin, is set to launch immediately following the halving with the goal of introducing greater utility to Bitcoin — a mission which started with Rodarmor's prior creation, Ordinals.

Rodarmor has described Runes as creating a venue for meme coins on Bitcoin, only with greater simplicity and efficiency than is currently provided by the BRC-20 token standard. Already, several Runes projects are being planned to coincide with the launch of the new protocol.

Network security

Although, in prior years, halvings did not lead to an economic attack on Bitcoin (like a 51% attack), there are some concerns that lower profitability could lead to enough miners turning off that it becomes theoretically possible. For instance, Bitcoin's hash rate declined 15% after the 2020 halving, 5% after 2016's halving, and 13% after 2012, therefore making Bitcoin less secure.

“The halving is one of the dumbest parts of how Bitcoin was designed. If you're going to reduce subsidy over time, the right way to do it is gradually, rather than shocking the system every four years,” legendary Bitcoin Core developer Peter Todd told CoinDesk. “Fortunately fees are getting higher, so the risk of havings is reducing. Hopefully this one goes alright.”

See also: How the Bitcoin Halving Could Affect Network Security

Rodarmor, and others, see Runes as important to the post-halving Bitcoin ecosystem in that it could bring out additional demand for block space — thereby bolstering the mining economy. Higher fees for validating transactions could however help to offset lower block reward revenue and keep the hash rate higher.

"I wouldn't advocate changing the halving schedule, but if I was going to design Bitcoin from scratch, I probably would not have picked such a fast decay," Rodarmor told CoinDesk. "But you don't go to war with the army you want, you go to war with the army you have. And this is the Bitcoin we have."

Ordinals was contentious among some corners of the Bitcoin community for causing network congestion and soaring user fees, something Runes would also probably face if it proves successful.

"I don't think that the best and highest use case for Bitcoin is Runes; I think that is bitcoin itself as a neutral, value delivery network," Rodarmor said. "However, I do think that it is good to create sources of demand for Bitcoin transactions, because ultimately that helps the security of the network."

If all goes well, it may not matter whether bitcoin is priced in.

Avail, a closely watched blockchain data-availability (DA) project, confirmed details of an upcoming drop, after screenshots of the eligibility criteria leaked out last week on the social-media platform X.

According to a blog post from the Avail team, 354,605 wallet addresses are eligible to claim the 600 million tokens in their “unification drop.” Recipients are widespread, but the team said that they must be either blockchain ecosystem developers, testnet contributors, users of rollups (Polygon, zkSync, Starknet, Optimism, and Arbitrum), Polygon PoS stakers or Avail community members that have made significant ecosystem contributions.

Recipients are able to start verifying token claims now up until May 4, and the tokens will be distributed when Avail DA launches.

Last week, CoinDesk reported that the details of the token airdrop were leaked, and many of the details were confirmed in Avail’s blogpost on Thursday.

Avail came into the limelight last year for developing its DA solution, which helps blockchains with data processing off-chain. DA solutions have gained a lot of buzz over the past few months, with the debut of projects like Celestia, which went live in October, and Eigenlayer’s EigenDA, which went live last week.

In February, Avail shared details about two other core products that the team is building out: Avail Nexus, which is an infrastructure layer that connects different rollups to each other through the Avail ecosystem, and Avail Fusion, which will take crypto assets like ether (ETH) or bitcoin (BTC) and contribute them to Avail’s security.

“The unification drop is a unifying force bringing different communities together, rewarding developers, governance contributors, technical educators, rollup users, stakers and other valuable contributors from across multiple blockchain communities,” Avail wrote in a blogpost.

Read more: Avail, Blockchain Data Availability Project, Sketches Out Eligibility for Token Airdrop