WILL BITCOIN HALVING SPUR BITCOIN BOOM?

Bitcoin has been in the midst of a significant turnaround, arguably spurred by major world events including widespread inflation, political instability, war, and misguided policies by misguided U.S. regulators.

Since Dec. 31, the largest crypto by market cap has recovered 67 percent from a 2022 collapse. 

And that uptrend may continue, not only because of geopolitics or economic factors, but because of the design of the bitcoin blockchain itself.

It’s called “Bitcoin Halving,” and it likely will be talked about more in the coming year.

How Bitcoin Halving Works

Bitcoin halving is a periodic event coded into the protocol that triggers every four years. As a result of the coded event, the reward for mining a block of Bitcoin becomes reduced by half. 

The first halving took place in 2012, the second in 2016, and the third in 2020.

According to Google, the next halving is expected to occur in April or May 2024, when the block reward will fall to 3.125. Over time, the impact of each halving will diminish as the block reward approaches zero.

Eventually (some time in the next century) bitcoin miners will earn money solely from verifying transactions, but not earn new “bitcoins,” since 21 million hard cap limit of bitcoin will have been produced by the original crypto blockchain.

Bitcoin mining is the process of verifying and adding transactions to the Bitcoin blockchain. Miners are rewarded with Bitcoin for their work. The reward for mining a block of Bitcoin is currently 6.25 BTC. After the next halving, the reward will be reduced to 3.125 BTC.

What Does the Future Hold for Bitcoin After the Next Halving?

Historically, the price of Bitcoin has increased significantly in the months leading up to and after a halving. This is likely due to a number of factors, including:

• Reduced supply: Halvings reduce the supply of Bitcoin in circulation, which can lead to an increase in price.
• Increased demand: Halvings can also lead to increased demand for Bitcoin, as investors and miners seek to acquire Bitcoin before the reward is reduced.
• Positive media attention: Halvings often receive positive media attention, which can also help to drive up the price of Bitcoin.

Though it’s impossible to say for sure what’s in store this time for Bitcoin’s price concerning the spring 2024 halving, many are making predictions.

According to Bloomberg Intelligence and analytics partner Matrixport, the halving may boost the token by at least 81 percent from its current 30-thousand dollar range.  (“Bitcoin ‘Halving’ Due Next Year Spurs Predictions of Rally in Token Past $50,000,” 23 Apr 2023.)

Historical trends support the likelihood that the price of Bitcoin will increase in the months leading up to and after the event.

Again, the hardcoding of “halving” into the Bitcoin protocol means that it is guaranteed to happen every four years, regardless of the price of Bitcoin or the state of the global economy.

As Bitcoin continues to grow in popularity and adoption, some believe halving events will become even more significant. If Bitcoin surpasses previous highs in 2024, it may only make the prospects for 2028 look even better to many potential users and investors.

Success breeds success, and greater adoption, new development initiatives and uses, and a general lift for the crypto sector may be wider benefits that result.

[Note: Google Bard was used for some information regarding Bitcoin halving in this article.]

COINBASE FILES COURT ACTION AGAINST SEC, ASKING FOR A RESPONSE ON PRIOR PETITION

SEC Gary Gensler’s recent appearance before Congress did little to provide clarity regarding the agency’s enforcement actions against Coinbase and others.

The evasive performance apparently helped stir Coinbase to file suit against the Federal agency this past Monday.

The action seeks to force the SEC to clarify crypto laws.

The new court action follows up action taken last July by one of the largest operating crypto exchanges in the U.S., when Coinbase sent the SEC a petition for rulemaking, requesting digital asset securities rules. 

According to crypto outlet Decrypt.co, the petition asked 50 questions to establish “clarity and certainty regarding the regulatory treatment of digital asset securities.” (“Coinbase Asks Court to Force SEC to Clarify Crypto Regulations,” 25 Apr 2023.)

A source informed Decrypt that the Administrative Procedure Act requires the SEC to respond to Coinbase’s petition within a “reasonable” timeframe. 

After nine months with no answer, Coinbase reportedly said it considered its new court action fair, considering the SEC’s lack of timely response.

The petition argues that answering concerns and adopting new digital asset securities standards would improve U.S. financial markets.

“We are simply requesting that the Court order the SEC to respond at all, which they are legally obligated to do,” Paul Grewal, Chief Legal Officer at Coinbase, commented about the new court action in a blog post. “It’s important for the SEC and any other agency petitioned for rulemaking to respond to the petition once the agency has made up its mind, especially if the answer is no. Otherwise, the public can never exercise its right to ask a court if the agency’s decision was proper.”

Gensler Signals More Negative U.S. Crypto Stance

Gensler has evidently felt the need to once again defend his own “regulation by enforcement” actions.

In a 27 April tweet of an “educational” video, Gensler confusingly argued that the regulations with regard to cryptos were sufficiently clear, while at the same time he refuses to specify whether major cryptos like Ethereum and others are “securities.”

Many also pointed out past comments Gensler made in 2018 that directly conflict with his current signaling as a government official.

The tweeted video defined crypto assets as “investment contracts” and urged platforms that sell them to register with the SEC to safeguard American investors.

Gensler argued an investment contract results when people spend money in a collective venture with a fair expectation of returns from the labor of others.

The counter-argument is that crypto tokens like Ethereum, to name one, are involved in a myriad of functions and use cases that render Gensler’s assessment woefully inadequate and antiquated, to properly and positively regulate the novel technology.

And Gensler himself has previously understood that. As Cointelegraph.com pointed out, a viral video from 2018 shows Gensler, then a professor at MIT, calling most cryptos non-securities and classifying them with cash and commodities. (“SEC’s Gary Gensler takes another swipe at crypto in educational video,” 27 Apr 2023.)

“Three-quarters of the market is non-securities,” Gensler said on video at a 2018 “Blockchain and Money” speech at MIT.

Ark Invest Buys Millions More Worth of Coinbase Stock

On the same day Coinbase announced its suit against the SEC, Cathie Wood’s Ark Invest bought more than 8.4 million dollars worth of the company’s stock, in a prominent signal of confidence in the exchange.

Crypto outlet theblock.co noted that Ark Invest has previously invested significantly in Coinbase.

CHINESE DITCHING DOLLAR FOR YUAN IN CROSS BORDER PAYMENTS

China means business when it comes to utilizing its native currency in cross border payments over the U.S. dollar, and the results are showing.

For the first time this past March, a majority of cross border payments involving China occurred in yuan.

According to Reuters, which compiled info based on State Administration of Foreign Exchange statistics, yuan cross-border payments and receipts reached a record $549.9 billion in March, up from $434.5 billion in February. (“Yuan overtakes dollar to become most-used currency in China’s cross-border transactions,” 26 Apr 2023.)

And an estimated 48.4 percent of those transactions utilized the yuan, outpacing transactions in U.S. dollars, which came in at 46.7 percent.

Reuters noted that the vast majority of global trade finance does not use the Yuan, and that the dollar retains dominance.

But even there, use of the yuan has doubled from about 2 percent to over 4 percent over the last year.

The trendlines of China, along with moves of a growing bloc of countries determined to participate in alternatives to dollar transactions, via the BRICS initiative, crypto adoption, etc., are unmistakable.

BRICS Continues to Build

Argentina, the United Arab Emirates, Algeria, Egypt, Bahrain, Indonesia, Saudi Arabia, Iran, Egypt, Ethiopia, Kenya, Nigeria, Senegal, and Thailand have indicated interest in joining BRICS, according to South Africa’s BRICS ambassador, Anil Sooklal. 

Saudi Arabia and Iran have formally applied to join the group, which was initially formed in 2006 by Brazil, Russia, India, and China, with South Africa joining in 2010. 

Among other things, the organization has fostered economic integration between participating nations, and a strategic lessening of dependence on the U.S. dollar. 

BRICS nations created the New Development Bank in 2014 to support emerging economy development initiatives. They also promote their currencies among themselves, and in international commerce.

TRENDPOST: In 2021 we predicted that the U.S. had advantages they could exploit as a relatively open and free democratic nation, if they led the way in welcoming crypto innovations.

Specifically, we noted as China cracked down on Bitcoin while rolling out its digital yuan, that the U.S. could begin to reform its monetary policies by allowing cryptos to act as a check. (See “THE GEOPOLITICS OF BITCOIN” 7 Jul 2021 and “CHINA MADE A TRILLION DOLLAR MISTAKE, SAYS MICROSTRATEGY CEO” 29 Jun 2021.) 

We also observed the wide array of crypto use cases that could transform not the financial industry, but every industry, introducing efficiencies and creating new value and wealth. (See “HUMAN RIGHTS FOUNDATION HEAD SAYS ‘BITCOIN IS THE REVOLUTION’,” 29 Jun 2021.)

Instead of taking that path, the Biden administration has taken a harsh anti-crypto stance, while building a case for issuing a “digital dollar” CBDC. (See “THE SAD JOURNEY TO AMERICAN SUNSET WILL COME WITH A SURVEILLANCE COIN,” 16 Aug 2022.)

At the same time, the U.S. miscalculated in weaponizing the dollar and international SWIFT system against Russia at the outbreak of the Russia-Ukraine conflict.

We forecast in real-time, as the U.S. implemented those sanctions, that the weaponization would drive the world away from the dollar, and hurt the U.S. most of all. (See “THE NEW NEUTRAL,” 29 Mar 2022.)

To sum up, the latest news concerning China’s cross border payments should come as no surprise to Trends Journal readers.