#002 Leverage Flushed Out: Block 840,000

The fourth bitcoin halving will occur at block height 840,000, over 15 years since the genesis block was mined on 3rd January 2009. Block rewards will halve from 6.25 BTC to 3.125 BTC per block on or around 20th April.

There are obvious impacts on supply here - miners sell BTC to pay for their operating costs and the available new supply hitting the market will be reduced by 50%. Acknowledging the small sample size, past halvings have been followed by strong BTC performance but this time round, ETF flows have altered market dynamics and we have hit new all time highs before the halving, breaking the historical pattern.

If crude and commodity prices continue grinding higher, we could see energy costs for miners using non-renewable sources start to mount and with core revenue (block rewards) dropping by 50% imminently, it would be natural to see miners with lower margins becoming acquisition targets for some of the larger, more efficient companies in the space. Marathon Digital CEO Fred Thiel has said approaching the halving, Marathon are focused on both organic and inorganic growth (M&A).

As the only 24/7/365 market, crypto allows traders to express an instant view whenever a global event occurs. Crypto sold off sharply on news of an attack on Israel launched from Iran late on Saturday UK time - BTC touched $61k but has recovered to the mid $65k region at time of writing. Equities opened Monday largely unchanged as sentiment cooled. We have seen clients active and buying this dip - B2C2 volumes were up close to 100% last week with 57% of our flow to the buy side.

This weekend’s moves saw over $1.5bn in long liquidations, resetting funding rates across the board to a healthy level down from the 80-100% annualised rates we saw on majors and alts in late March of this year.?

A quick observation is that BTC has been moving more in line with macro news in the past few weeks, creating additional reasons for shorter term crypto traders to be closely watching CPI prints, rate decisions and geopolitics.

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