Newsletter

The Bitcoin Bungalow | Issue 4 | April 25 2024

April 30, 2024

Christos Salaforis

4 minutes

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Happy Bitcoin Halving!

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Last week, April 19th, we celebrated the 4th Bitcoin halving.

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What is the Bitcoin Halving?

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The Bitcoin halving is a significant event in the Bitcoin and wider cryptocurrency world that occurs approximately every four years, or more precisely, every 210,000 blocks mined. This event is a part of Bitcoin's design to combat inflation and to extend the period over which bitcoins are generated. Essentially, the Bitcoin halving reduces the reward that miners receive for adding new blocks to the blockchain by 50%. This halving process continues until the maximum supply of 21 million bitcoins has been reached, which is expected to happen around the year 2140.

What Does the Bitcoin Halving Mean?

  1. Reduction in Supply: The primary effect of the halving is the reduction in the rate at which new bitcoins are created. This can lead to a decrease in supply, potentially increasing the price if demand remains strong.
  2. Impact on Miners: Miners see their revenue from mining rewards halved, which can affect their profitability. This might lead to a decrease in mining activity unless compensated by increases in the value of Bitcoin or reductions in mining costs.
  3. Speculation and Price Volatility: Each halving has historically led to significant speculation, investment, and volatility in the Bitcoin market. Many investors view the halving as a potentially bullish event for Bitcoin prices.

What Does The Latest Bitcoin Halving Mean?

The most recent Bitcoin halving occurred on April 19th 2024. Following the 2024 halving:

  • Mining Reward: The reward for mining a block was reduced from 6.25 bitcoins to 3.125 BTC.
  • Market Reaction: There was considerable speculation and interest leading up to and following the halving. We will see how Bitcoin performs in the coming months.
  • Long-Term Implications: The reduced flow of new bitcoins coming into circulation is seen as a tightening of supply, which some analysts believe supports higher prices in the long term, though some do have reservations over Bitcoin's fee markets and whether the price of Bitcoin can rise high enough to subsidise miners for the long term and ensure the costs do not outweigh the reward. This remains to be seen.

Future Expectations

The next Bitcoin halving is expected around 2028. As the reward drops to 1.5625 bitcoins per block, similar patterns of miner consolidation, price volatility, and market speculation are anticipated. How the market actually reacts will depend on a variety of factors including technological developments, regulatory changes, and broader economic conditions impacting cryptocurrency markets.
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Each halving is a major event that renews focus on Bitcoin’s long-term scarcity and economic principles, reinforcing its narrative as "digital gold." However, the specific outcomes of each halving can vary widely based on the contemporary context of the market and global economy.

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📈 General Bitcoin Market News

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Fear and Greed Index

  • ‍Current Value: 72
  • Change Since Last Week: +15
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Bitcoin Fear & Greed Index

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Bitcoin Price Update

  • ‍Current Price: $64,574.69
  • Weekly Percentage Change: +2.64%
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‍Market Sentiment

  • The excitement around the halving led to a weekend pump of around +9-10% which has since been pegged back -3%. There is some uncertainty but the optimism for the future remains.
  • Net ETF Inflows at +$2.5b seem to indicate an increase of optimism: source‍
  • The market seems mostly optimistic with some underlying uncertainty and fear about what could happen next with regards to global tensions.
  • The federal funds rate (FFR) is steady at 5.25-5.5%.
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BTC Liquidations

  • Total Shorts Liquidated: $120.89M
  • Total Longs Liquidated: $169.25M

Source

🌐 Bitcoin Ecosystem Updates

Stacks News

At Bitcoin block 840,360, the first fork kicked off the two-step rollout process that will bring the Nakamoto Upgrade. With the Release Rollout having begun, now the anticipated wait for activation begins, which is set to complete during the Activation Window: May 15-29. This grand upgrade to the network will usher in fast block times and transactions secured by 100% Bitcoin finality.

Key Changes with the Nakamoto Upgrade
  • Fast Block Production: The upgrade will decouple block production from cryptographic sortition, allowing for faster production of blocks. This change will enable miners to produce more blocks simultaneously while stackers help validate, eliminating the need for sortition.
  • Bitcoin Finality: Transactions on the Stacks blockchain will become as irreversible as those on Bitcoin, enhancing the immutability and security of the network.
  • Elimination of Forks: The upgrade aims to prevent the Stacks blockchain from forking on its own, ensuring more stability and consistency.
  • Fair Play in Mining: Adjustments to the sortition algorithm will reduce the advantage that Bitcoin miners currently have over Stacks miners, aiming to minimize Miner Extractable Value (MEV) manipulation and ensure fair competition.
  • Tying Block Production to Bitcoin: Stacks block production will be tied directly to Bitcoin block production, leading to synchronized and faster block times while maintaining security and preventing forks.
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The Nakamoto Upgrade is designed to address various issues within the Stacks ecosystem, including slow block times and challenges in miner cooperation, by implementing significant technical advancements to enhance speed, security, and fairness in mining practices.

Stacks Ecosystem Update

  • Lunar Crush reports  share of social activity has accelerated up to a whopping 1.25% of all social activity across all cryptocurrencies.
  • Mojo, a 1,000 piece commemorative PFP collection dropped this week. Minting just in time to celebrate the Stacks Nakamoto upgrade and the Bitcoin halving!
  • Free education platform LearnWeb3IO announced the release of the Stacks Developer Degree.
  • Yala will leverage its meta yield stablecoin to make liquidity composable across different blockchains and bring native Bitcoin liquidity to Stacks.
  • Alex Lab releases a Beginners Guide to Runes as they position themselves to enable Rune Launches via their launchpad, Rune Swaps via their AMM and supporting bridging of Runes to Bitcoin L2s via XLink.
  • Lisa Lab announce that stackers snapshot was taken at Bitcoin Block 840360. Addresses will automatically participate in the bonus points events – earn up to 84x bonus points.
  • Stacking DAO announce The Nakamoto Odyssey, a 20x one-time point increase on new STX deposits to celebrate the Nakamoto release: learn more.
  • Bitflow announce a Runes AMM coming soon and now giving users the chance to earn 2.5x points with stSTX/STX LPs.
  • Zest Protocol Stacks Market Points are live. Users are earning 1 point per $1 per day. More rewards will come when public launch arrives on May 5.
  • Velar announce the launch of Meme Stacker, a community focused product that enables anyone to deploy their own token for free, with ease, and distribute/list it manually. Currently Velar tops the charts for Most Swaps in the Ecosystem.

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Top Bitcoin Ecosystem Highlights

  • BOB | Build on Bitcoin
    • Mainnet launches on May 1: A guide on what is to come.
    • Bitperp announce they will deploy on BOB. Bitperp is a perpetuals exchange and dynamic marketplace which unlocks leveraged trading on BRC20s, Runes, Ordinals on Bitcoin L2s.
    • Segment Finance announces it will be live on BOB come May 1. Segment Finance is a decentralized, non-custodial liquidity market protocol.
    • BOB Fusion hits $300m TVL.
    • Risc Zero share that BOB are already leveraging RISC Zero’s zkVM to build zk-rollups, tooling, and scaling solutions for the Bitcoin ecosystem.
    • Layer Zero will support BOB mainnet for omnichain transfers across multiple chains.
    • BOB will integrate Particle Network's Bitcoin account abstraction protocol, BTC Connect, for a smooth BOB mainnet UX.
BOB Ecosystem Map
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  • Merlin Chain:
    • OnePiece labs in partnership with Merlin Chain, OKX Ventures and Franklin Templeton Digital Assets introduce the Runes Incubator set to power a promising future for Runes projects. Deadline to apply is May 20th. Learn more.
    • Meson Finance announce the launch of M-USDT and M-USDC. Now, users can seamlessly navigate between Merlin Chain and over other 50 chains, freely swapping in and out of M-USDT and M-USDC.
    • $MERL is now traded on OKX, Bybit, HTX, Gate, BingX, Bitget, Hashkey and more.

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Exploring BitVMX: A New Frontier in Bitcoin Technology

A promising development, BitVMX, is capturing the attention of the Bitcoin community. This innovative framework is designed to facilitate the optimistic execution of arbitrary programs directly on the Bitcoin network, without the need for network forks.

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What sets BitVMX apart is its foundation in the N-party disputable computation paradigm, which allows the framework to function efficiently and securely. BitVMX introduces a unique method of locking funds within Bitcoin's unspent transaction outputs (UTXOs), which are only released following successful program execution as verified through a robust dispute resolution protocol. This protocol ensures that only legitimate transactions are processed, safeguarding against potential fraud.

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The BitVMX framework is not just a theoretical exercise; it has practical applications that could significantly expand Bitcoin's capabilities. For instance, it aims to support the running of fully-compliant RISC-V processors and is being developed to facilitate blockchain bridges, aggregator oracles, and even complex tasks like SNARK/STARK verification. This could lead to innovative use cases such as Zero Knowledge Contingent Payments, enhancing Bitcoin’s utility.

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This initiative is supported by Rootstock Labs, with notable contributions from their team in collaboration with Fairgate Labs. Together, they are pushing the boundaries of what's possible on the Bitcoin blockchain, aiming to provide a secure, extensible, and open-source solution that could transform blockchain interactions across numerous industries.

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As this technology continues to develop, it holds the potential to usher in a new era of blockchain functionality, expanding the scope of Bitcoin’s application far beyond its original design.

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  • ‍Sovryn:
    • $POWA token is the first Rune bridged to RSK.
    • FastBTC-Relay is now back to full operational status.
    • Sovryn's Guide to Runes.
    • TVL for Sovryn Runes & Extra Spice deposits broke past $12,000,000. 5 days left to participate: here.
    • Launching Runes trading with a fully functional L2 solution, ensuring smooth, cost-effective transactions without mainchain hassles. Starting May 1st with the BOB launch. Read more.
    • Bitcoin OS released a whitepaper. Sovryn will be the first to Launch a BitcoinOS rollup, bringing the power of DeFi, secured directly by Bitcoin, to the world.

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  • Xverse has surpassed 1,000,000 download. Congratulations!

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Runes Ecosystem

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Upcoming Events

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Closing Thoughts‍

As we reflect on the recent Bitcoin halving, the event underscores Bitcoin's unique economic design to combat inflation and hints at potential impacts on the cryptocurrency's market dynamics. This halving not only reduces mining rewards, potentially influencing Bitcoin's price through decreased supply but also pressures miners with lower earnings, possibly leading to a consolidation in mining operations. Merge mining may help add value but the future will reveal all. Amid these changes, technological advancements within the Bitcoin ecosystem, like the Stacks Nakamoto upgrade or BitVMX, continue to push the boundaries of Bitcoin's potential. As we look ahead, the community remains engaged, speculating on how these shifts will shape Bitcoin's role as digital gold in the evolving financial landscape.

Once again, Happy Bitcoin Halving!