Your Ultimate Guide To The Bitcoin Halving

Hey LinkedIn,

It's finally here. The event we wait every four years for—no, not the Olympics!

Join us in our two-part guide to next week's Bitcoin halving! ??

Bitcoin Halving 101

What is it? The halving is a hardcoded event where the rewards that Bitcoin miners earn for mining new blocks decreases by 50%. With this upcoming halving, rewards will halve from 6.25 BTC per block to 3.125 BTC per block.

When and how often? It occurs after every 210,000 blocks are mined (~4 years), with the next halving happening around April 20. This will continue until roughly the year 2140 until all BTC is mined.

What’s the impact?

It's a supply side shake-up for miners. As a result, big miners are stockpiling BTC to prepare themselves.

Arguably, the biggest impact of the halving is on BTC's price.

Previous cycles have one thing in common, BTC tends to rally in the year after the halving.

Industry figures such as Hut 8 Mining CEO Asher Genoot expect this upcoming halving to be the most impactful yet. Similarly, Bitwise CEO Hunter Horsley thinks the market is overlooking it.

So, BTC will go up... right?

Not quite.

The halving is a known event, so it's by no means a surprise.

This is why many believe the halving is a 'sell-the-news' event. Arthur Hayes, investor and co-founder of BitMEX argues the halving could be bearish in the immediate short-term.

“I agree that it will pump prices in the medium term; however, the price action directly before and after could be negative. The narrative of the halving being positive for crypto prices is well entrenched. When most market participants agree on a certain outcome, the opposite usually occurs. That is why I believe Bitcoin and crypto prices in general will slump around the halving.”

How should you play the halving?

To give you an idea on how some of the team are playing the upcoming halving, we’re making our recent post ‘Unfiltered Thoughts: How I’m Playing the Bitcoin Halving’ free!

Spoiler: It really depends on how you're positioned, but stacking any dip could be the play given how well BTC has historically performed post-halving.

Project launches?

With talks of the halving being dominated by price speculation, many?are overlooking the projects launching at the halving.

Projects such as Runes (creator of the Ordinals protocol) are building a better token standard for Bitcoin, while Bitcoin scaling projects such as Build on Bitcoin (BOB) are set to launch at the halving.

But more on these next week!

The bottom line

The halving is huge for Bitcoin. Not only does it remind people of Bitcoin's inherent scarcity, it also has strong narrative appeal.

We typically see BTC rally in the year after the halving, and it’ll take a brave person to think this will end anytime soon.

But we should approach it cautiously, given that the short-term effect of the halving is always much harder to predict.

Crypto investment products hit a record

What happened? Crypto investment products recently hit $13.8B in year-to-date inflows, enough to beat any prior calendar year.

Why does it matter to you? It’s a reminder not to be too discouraged by recent outflows, given the tremendous amount of capital that’s entered the space. Just three months into the year, and the yearly record of inflows from 2021 has already been topped!

Stablecoins back in the limelight: eyes all-time high

What happened? Sony Bank, a division of the Sony Group Corporation, is testing the issuance of a yen-backed stablecoin on Polygon, following the footsteps of Ripple who cited the massive market opportunity for its expansion into stablecoins.

Why does it matter to you? The stablecoin could be a potential payment method for businesses using Sony's intellectual property and builds on NFT patents filed earlier this year. Total stablecoin supply is within 10% of a new high, indicating a resurgence into capital flowing onchain.

SEC warns Uniswap Labs of potential enforcement action

What happened? The entity that created Uniswap received a notice from the U.S. Securities and Exchange Commission (SEC) that it intends to pursue an enforcement action. The UNI token fell by nearly 10% after the news.

Why does it matter to you? CEO Hayden Adams said Uniswap Labs is “ready to fight” and is setting up to be a precedent setting case for the rest of the industry.

• Monad Labs raised $225M for its L1 blockchain taking on Ethereum and Solana.
• Base is experiencing a surge in inflows.
• dYdX Chain stopped producing blocks for almost 10 hours due to a bug mistakenly included in a software release.
• Tensor, a Solana NFT marketplace, launched its TNSR airdrop and token.
• Sushi came under fire for a proposed treasury takeover.
• $1.9B of locked-up SOL from the FTX estate was sold at a discounted rate of $64.
• EigenLayer launched on mainnet, with greater functionality expected later this year.

Thanks for reading the Weekly Shift.

We hope you've enjoyed it, and look forward to seeing you next week!

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