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In This Issue:
Satributes And Ordinals And Runes
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
This Halving Is Different
What Exactly Did The EU Ban?
More Fake News
Bitcoin Will Hit $1,000,000 | Why Is Arthur Hayes So Bullish On Crypto
Satributes And Ordinals And Runes
The halving event, often predictable and understated, doesn't usually stir much excitement. It's a scheduled part of the Bitcoin protocol, making its impact on the price somewhat anticipated and thus, often uneventful. Typically, it passes as a day of minor celebrations among the most enthusiastic Bitcoin supporters, after which the community moves on as usual.
However, the latest halving has taken a different turn, drawing unexpected attention to the miner of the halving block, marking a shift in the community's interest and engagement with this core event.
Before I proceed, I must give credit where it's due. This introduction was inspired by a recent deep dive I took into the halving, Bitcoin, and ordinals, which led me to Tristan and his blog post. If you appreciate this introduction or wish to dive deeper, please click on the two links above. Now, back to business.
The introduction of Ordinals has significantly altered the landscape for Bitcoin miners and reshaped our understanding of MEV (Miner Extractable Value) and its implications for the halving event.
MEV refers to the extra value miners can extract by choosing the sequence and inclusion of transactions in a block, leveraging their power to prioritize transactions based on potential profits. This concept has taken on new dimensions with the advent of Ordinals, which has intensified the competition for block space and driven up transaction fees.
But what does this shift mean for the upcoming halving, and why is block 840,000 garnering unprecedented attention? The key lies in the innovative Ordinal technology, which enables the embedding of unique inscriptions onto individual Satoshis. This capability transforms previously fungible Bitcoin units into potentially more valuable assets based on criteria like aesthetics, historical significance, or their position on the blockchain. Here are some examples of these "Satributes," highlighting the unique blend of non-fungible characteristics with Bitcoin's fungible nature.
While "Satributes" might not capture the interest of every Bitcoin enthusiast, their market value cannot be ignored, especially with prestigious auction houses like Sotheby’s stepping into the fray. Recently, a 'rare' Satoshi—the first Satoshi minted in each difficulty adjustment period—fetched a staggering $100,000. Remarkably, these 'rare' Satoshis are 100 times more abundant than the highly coveted 'Epic' Satoshi, underscoring the burgeoning market for these unique digital assets and setting the stage for intriguing developments in the Bitcoin ecosystem.
The market for ordinals has seen some items sell for astonishing prices, hinting at the potential frenzy among extreme collectors for inscriptions on an 'Epic' Satoshi. However, block 840,000 holds significance beyond just hosting an 'Epic' Satoshi.
Coinciding with the halving, this block will also mark the debut of a new token standard named Rune, which aims to enhance the current BRC-20 standard used for creating fungible tokens on Bitcoin. Without delving too deep into the technicalities, a key difference between BRC-20 and Rune is Rune's flexibility. It allows project teams to allocate a portion of the initial token supply to themselves, offering a significant financial lure for protocols aspiring to be the inaugural Rune token issuer. Given the considerable value of being the first mover in the crypto space, this innovation could spur a rush among developers.
At this juncture, it's time to hand over the discussion to the visionary behind this concept, allowing them to elaborate further on the future implications of these developments.
I'll admit, the detailed speculations around block 840,000 and the introduction of Runes can be quite intricate, but the overarching concept is fascinating. We're on the cusp of potentially groundbreaking developments, and while it's too early to back any specific projects or teams—given the speculative nature of these ventures—the opportunity for astute investors and traders to capitalize on these innovations is clear. The crypto world values originality in art and technology, especially when backed by a robust community and uniqueness, which can command significant premiums.
I hope this exploration, a departure from my usual topics, has piqued your interest. Even if these specifics don't resonate with you, they underscore Bitcoin's vast potential and the endless possibilities it offers. Here's to a fantastic week ahead, and a heartfelt thanks for your continued support.
Bitcoin Thoughts And Analysis
Bitcoin has a decent weekly close, with a long wick down on the candle showing tremendous buying demand off of the lows. That said, the previous week’s spinning top candle showed indecision and both buyers and sellers pushing on any real move. It seems we are in the chop at the moment. I still want a close above $69,000 for any sort of real confirmation of a move up. For now, more indecision according to the chart.
Altcoin Charts
For those who are new here, I share SETUPS and not SIGNALS. These are ideas that I am watching - if a certain thing happens, then the trade triggers. I am not telling you what to buy or when. I am showing you how I am watching certain charts and what has to happen for me to take a trade.
Link was one of the first altcoins to move during the early days of this bull market and has largely stalled since. This has caused sentiment to shift negative, as impatient traders call it “dead” and ask why it refuses to rise. They have short memories.
As you can see, LINK is still working on flipping key former resistance (the blue zone) to support. Last week’s candle was a beautiful dragonfly doji with a long wick down and small body. This is a reversal candle, right through that key support. A bullish candle this week would confirm a likely reversal. Perhaps it is time for LINK to move again, we shall see.
Legacy Markets
The stock market's recent rally encountered a pause as traders and investors awaited new catalysts and digested a slate of upcoming U.S. economic data, notably the Federal Reserve's favored inflation gauge. This comes on the heels of the S&P 500 recording its best week of the year, fueled by expectations of a potential Fed rate cut, sparked by dovish comments from Fed Chair Jerome Powell. However, the anticipation has turned to caution as concerns over stock valuations surface, following significant gains in global markets.
In Europe, the Stoxx Europe 600 index experienced a slight decline after nine consecutive weeks of gains, marking its longest streak in over a decade. U.S. equity futures similarly edged lower, reflecting a cautious stance among traders who are closely monitoring treasury yields and the Bloomberg dollar spot index for signs of market direction.
The investment climate is characterized by a mixture of optimism and unease. While there's a growing belief in the Fed's leniency on rates, the high valuations post-rally have heightened the perceived risks in the market, suggesting a potentially more challenging period ahead.
Despite these valuation concerns, Goldman Sachs analysts believe European equity valuations have not yet reached overstretched levels, predicting the Stoxx Europe 600 could still see an upward movement of about 6% over the next year.
Geopolitical events have also influenced market sentiments. Shares in European defense companies surged in response to a devastating terrorist attack in Moscow, underscoring the impact of global events on market dynamics. Meanwhile, in the U.S., technology stocks faced pressure following reports of China's intent to reduce its reliance on U.S.-made chips, affecting major companies like Intel and AMD.
Asian markets had a muted response, with Japanese equities dropping amid currency interventions and the yuan strengthening against the dollar, partly due to actions by China's central bank.
In the commodities sector, oil prices rose, driven by the geopolitical tensions and positive forecasts for the commodities market. Gold remained stable, while iron ore maintained its gains. The cryptocurrency market saw an uplift, with Bitcoin's rise positively affecting related stocks in U.S. premarket trading.
As the market braces for the upcoming economic data and navigates through geopolitical uncertainties, the focus remains on how these factors will influence the Fed's policy decisions and the broader financial landscape.
Key events this week:
Bank of England policymaker Catherine Mann speaks, Monday
US new home sales, Monday
Fed’s Austan Goolsbee, Lisa Cook, Raphael Bostic speak, Monday
ECB chief economist Philip Lane appearance, Tuesday
US durable goods, Conference Board consumer confidence, Tuesday
Australia CPI, Wednesday
Bank of Japan board member Noaki Tamura speaks, Wednesday
China industrial profits, Wednesday
Bank of Communications, Agricultural Bank of China, China Merchants Bank report earnings, Wednesday
Eurozone economic, consumer confidence, Wednesday
Bank of England issues financial policy committee minutes, Wednesday
Fed’s Christopher Waller speaks, Wednesday
Germany unemployment, Thursday
UK GDP revision, Thursday
US University of Michigan consumer sentiment, initial jobless claims, GDP, Thursday
Japan unemployment, Tokyo CPI, Friday
France CPI, Friday
US personal income and spending, wholesale inventories, Friday
Exchanges closed in US and many other countries in observance of Good Friday holiday, Friday
Fed’s Jerome Powell, Mary Daly speak, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.1% as of 9:27 a.m. London time
S&P 500 futures fell 0.1%
Nasdaq 100 futures fell 0.2%
Futures on the Dow Jones Industrial Average fell 0.1%
The MSCI Asia Pacific Index fell 0.6%
The MSCI Emerging Markets Index fell 0.2%
Currencies
The Bloomberg Dollar Spot Index fell 0.1%
The euro was little changed at $1.0818
The Japanese yen was little changed at 151.40 per dollar
The offshore yuan rose 0.3% to 7.2524 per dollar
The British pound was little changed at $1.2610
Cryptocurrencies
Bitcoin rose 1.1% to $66,871.88
Ether rose 0.9% to $3,442.76
Bonds
The yield on 10-year Treasuries advanced three basis points to 4.22%
Germany’s 10-year yield advanced two basis points to 2.34%
Britain’s 10-year yield advanced two basis points to 3.94%
Commodities
Brent crude rose 0.6% to $85.98 a barrel
Spot gold was little changed
This Halving Is Different
In line with my goal to provide insightful education on the Bitcoin halving, I've encountered some compelling distinctions about the imminent halving, now just 20 days away, from previous ones. Notably, Bitcoin has hit an all-time high prior to this halving and could potentially set a new record on the day itself. Given the current bullish sentiment so close to the halving, it wouldn't be surprising to see the hype contribute to a price increase, despite the halving typically not triggering substantial short-term market movements.
A significant departure this time around is the role of transaction fees, which for the first time during a halving, constitute a considerable share of miners' income. High transaction fees aren't new, but their coincidence with the halving could influence which mining rigs stay in operation afterwards.
Furthermore, this halving is unique because block 840,000, associated with the event, is anticipated to be the most valuable ever mined, primarily due to the integration of Ordinals into the Bitcoin network—a topic we've explored earlier.
While each halving brings its own excitement and speculation, this particular event stands out, albeit without likely impacting the average Bitcoin investor in a significant, immediate way.
What Exactly Did The EU Ban?
Crypto Twitter erupted into chaos this past weekend over news that the European Union had voted on and passed a new framework to combat money laundering and terrorist financing, with implications for the crypto industry. Headlines and articles varied, leading to false claims that the EU had "banned DeFi and crypto wallets," which is concerning for several reasons.
Firstly, the 329-page regulation was not solely focused on crypto but was part of a broader effort targeting various digital and non-digital sectors vulnerable to abuse. The document consistently refers to "obliged entities," which are regulated financial institutions.
Secondly, much of the ‘new’ regulation mirrors existing rules, such as requirements for banks, exchanges, and companies to operate transparently. The prohibition against anonymity does not extend to hardware and software providers or self-custody wallets that do not control assets, including wallets such as Ledger, Trezor, and MetaMask, as shown in the screenshot below.
Thirdly, the legislation does not mention a 3,000 Euro limit. Contrary to claims, the EU did not ban anonymous crypto transactions over 3,000 Euros using self-custody wallets. Instead, it introduced a Union-wide limit of 10,000 Euros for large cash payments.
Lastly, this legislation will not take effect for three years, with the possibility of earlier implementation. Given that crypto is a small part of the framework, much could change. It's crucial to address such legislation promptly and accurately, as overstating bans can be counterproductive when real threats arise. Identifying and countering misinformation is key to success in navigating regulatory challenges.
If you want a non-clickbait, professional take, I recommend this thread and this thread.
More Fake News
Why do some 'trusted' crypto news outlets distort simple statements into misleading headlines? Over the past weekend, headlines such as "BlackRock Reconsiders Ether ETFs Amid Client Preference for BTC" and "BlackRock May Pause Ethereum ETF Plans Over Client Demand" circulated, despite not being accurate. At the Bitcoin Investor Day conference in New York, Robert Mitchnick, BlackRock’s head of digital assets, actually said, "For our clients, Bitcoin is overwhelmingly the number one priority. And then a little bit Ethereum, and very little everything else."
Given the imminent deadline, it's illogical to suggest BlackRock would abandon its Ethereum ETF application, particularly with the company's growing interest in tokenization and real-world assets (RWAs). If BlackRock is keen on bolstering BUIDL, why would it shy away from promoting Ethereum, the very platform that facilitates BUIDL? Although Ethereum might not be as in demand as Bitcoin among its investors, retracting the application doesn't align with the available information.
Bitcoin Will Hit $1,000,000 | Why Is Arthur Hayes So Bullish On Crypto
Arthur Hayes is a renowned figure in the crypto community, widely recognized as one of the pioneers. He consistently provides insightful analysis of the crypto market and blockchain technology through his blog. In this episode of The Wolf Of All Streets podcast, we delve into a myriad of topics ranging from macroeconomics to ETFs, the ongoing bull market, NFTs, and notably, Arthur's bold prediction that BTC will soar to $1,000,000. Watch this episode to learn more about crypto and gain valuable insights from Arthur Hayes himself.
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.
Helped clarify some of what Edan Yago said on Scott's YT video today. He seemed really keen on Runes which I now know are a class of tokens like BRC-20s but they allow the token creator to reserve some of the token supply to themselves. Nothing to do with Thor chain. I must admit I don't like the idea of well-heeled individuals bribing miner pools. Trying to learn about layers using bitcoin network for settlements. Surprised Yago did not mention Stacks and was mainly focused on rollups.