Good morning, and welcome to First Mover, our daily newsletter putting the latest moves in crypto markets in context.
The Bank of Canada is also due for a similar oversized move later this week while the European Central Bank is expected to raise borrowing costs four times within a year, according to Bloomberg.
With so much tightening in the pipeline, the path of least resistance for risk assets, including cryptocurrencies, appears to be on the downside.
Amid the Fed-induced gloom and doom, some investors are betting that history will repeat itself with animal spirits returning to the bitcoin market in the lead up to and following the mining reward halving due in less than two years.
To the uninitiated, bitcoin’s mining reward halving is a programmed code to reduce the pace of supply expansion by 50% every four years.
Historically, the halving cycle has comprised a two-year recovery rally ahead of the event, followed by a year-long meteoric run and a 12-month bear market.
“There are a couple of reasons; the first is that the power of miners has diminished greatly since the last halving,” Talati told CoinDesk in a Zoom call.
Glassnode data shows the 30-day average of the number of bitcoin minted currently stands at 900 BTC, worth $35 million – that’s just 0.14% of bitcoin’s 24-hour trading volume of $24.7 billion.
The growing number of listed bitcoin mining companies has further boosted access to capital markets,” CoinDesk’s sister company Genesis Global Trading said in a daily newsletter dated Dec.
GoldenTree Asset Management, a New York-based firm with $45 billion under management that added bitcoin to its balance sheet last year, recently hired BlockTower Capital’s co-portfolio manager, Avi Felman, as its new head of digital assets trading.
“Today, I am seeing really smart people getting involved” despite the bear run, Talati said.
It’s just that the crypto market has matured with several factors influencing valuations, as is the case with traditional markets.
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