Stormrake - Insights #Bitcoin Halving

Ethereum ETF likely to be approved

Wed, 22 May 2024 16:19:36 +1000

Is 2024 the year for cryptocurrency ETFs? As the SEC, once seen as the enemy of crypto, is on track to approve an Ethereum spot ETF.

Bloomberg ETF analysts have increased their odds of the spot Ethereum ETF to an approval chance of 75%. Prior to this news, the likelihood of approval was sitting at a measly 25%.

ETH rallied to $3700, nearly 20% rise in one day on the back of this announcement. Whales purchased over 110,000 ETH worth $341 million (USD) in 24 hours. Ethereum experienced its largest amount of trading volume of any 12 hour period since March 14 2023.

May 23rd can’t come around any sooner for those invested into Ethereum and the crypto space. Whilst not guaranteed to be successful, the chance of the ETF approval is extremely bullish for all things crypto as it will result in more money entering the space. The drastic change in the likelihood of success stems from the SEC asking crypto exchanges to update their 19b-4 filings, these rule changes suggest that the SEC is making progress towards approving the spot Ethereum ETFs.

Potential Outcomes of the ETF Decision:

May 23rd will either be incredibly bullish for the crypto space or may see the entire crypto space suffer. Whilst no one knows what will happen to prices if the ETF is approved or not, we can speculate. There are two possible scenarios we will speculate on: ETF approval or ETF rejection.

If the Spot Ethereum ETF is approved:

Long term bullish on ETH; this approval can only result in good things for ETH as it will result in more inflows into the coin. Ethereum is currently 33% away from it's all time high (at the time of writing). The long term effect of the ETF approval should see it blow past its high of $4,900 (USD). This is similar to what we saw happen with BTC, the spot ETF approval was the catalyst for Bitcoin hitting its ATH prior to the halving.

Short term; we may see a pullback in ETH. When the spot Bitcoin ETF was approved, we saw BTC pullback 17% over the next two weeks before continuing to rally and break all time highs. Bitcoin saw its major move prior to the approval of the ETF. Driven by the pure hype and speculation of a potential ETF, BTC rallied almost 90% since October 2023 before its approval in January of this year. Could we see similar price action occur with Ethereum? ETH rallied 20% yesterday due to the speculation of the ETF approval. Unlike Bitcoin, Ethereum has the added benefit of not having an existing ETF vehicle in Grayscale BTC. Bitcoin had the sell pressure of GBTC holders who were not able to sell their BTC for years and were finally able to sell once the other ETFs were approved. Thus, meaning Ethereum should experience much less selling pressure for Ethereum after the approval of the ETF.

Altcoins should follow Ethereum's price action, and continue their rallies and success.

If the Spot Ethereum ETF is rejected:

In the unlikely event that the ETF is declined, we can expect a major crash in the crypto space, with Ethereum likely to lead the charge. Those who purchased Ethereum in anticipation of the approval will likely sell, causing the price to slump. Whilst Bitcoin will fall, we should expect money to flow back into BTC and stablecoins. Altcoins will suffer the most.

All hope will not be lost if the SEC rejects the ETF, we can expect the applicants to make adjustments to their filings and then reapply for the ETF. The eventual approval of an Ethereum ETF is almost inevitable.

How the Spot Ethereum ETF may shape the course of American Politics:

With the upcoming US election, the upcoming spot Ethereum ETF will play a vital role in determining who becomes president. With crypto-backed candidates winning five out of six primary races, with more races to come, showing growing political power.

The SEC will soon reveal their stance on cryptocurrency on Friday. Speculation is rising that the Democrats are pushing the SEC behind the scenes to approve the Ethereum ETF in an attempt to increase their election bid. It may seem that they are becoming more crypto ‘tolerant’, with approving a Bitcoin ETF and now potentially an Ethereum ETF. Meanwhile, Donald Trump has claimed to be the ‘Crypto-President’ and has promised to support cryptocurrency if he is elected.

Regardless of Friday's outcome, we remain bullish on Bitcoin and the rest of the crypto space. If the ETF is to be rejected, it will be another set back, but the crypto space has had its fair share of setbacks and has always continued to push on and grow.

2024 is shaping up to be a pivotal year for cryptocurrency with the SEC likely to approve a spot Ethereum ETF, driving bullish momentum and political implications for the entire crypto space.

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The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

Stormrake is not a financial adviser and does not provide financial product advice. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Stormrake is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by this newsletter.

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BTC The Calm Before the Storm!

Sun, 14 Apr 2024 09:51:32 +1000

In the last month since our February analysis, Bitcoin’s Price Action has been choppy to say the least. Whilst we’ve watched Bitcoin technically make a new All-Time-High in $USD, we’ve also been subject to much needed consolidation during this time period after reaching a temporary peak of $73,794, which landed us and sustained price well above $100,000 now in AUD for a single Bitcoin.

What was once such a distant hope for many back when I started trading cryptocurrency back in 2017 has since become a reality, etching out a remarkable feat in Bitcoin’s history. While it might be fitting to celebrate, we also need to be prudent in watching how this consolidation pattern we’re currently in plays out. Whilst we’re currently sitting nicely above the April and November 2021 highs, we’re also losing momentum from the monstrous rally we’ve been a part of since the start of 2023 which can be seen across all timeframes now. If for some reason we were to break down out of this current chop and solidify it as Distribution, we would likely see a sharp retracement below the previous cycles high’s, in-turn looking for the nearest support on the current move we’ve made over the last year. On the higher time-frames such as the Weekly and Monthly (usually best used for larger macro moves) we would see that sitting right where we reversed trend at $45,620 where we defied the previous cycles immensely strong resistance and slammed through with sheer tenacity, leading us to where we are now in price.

This level is of key importance as it remains untested, meaning that there will be significant buying liquidity from the Bears waiting for a retracement now as it’s the next key support underneath where we are now on higher time frames, assuming we lose momentum here and look below the 2021 High’s over the coming months.

On the other hand, assuming the US FED keep seeding the narrative of a “Soft-landing” when it comes to Inflation and we don’t see any unforeseen macro-economic shifts in sentiment pertaining to the notion of a recovery coming out of the Inflation crisis in the eyes of the masses, it’s not unfathomable to consider whilst subject to continued Bitcoin ETF bidding reaching new high’s in terms of Volume that we could see us continuing to hold the previous cycles highs as support for a while longer before making the next leg up. In this scenario, we would need to instead of using Fibonacci as a retracement tool (as discussed in last month’s analysis) we would be using Fibonacci’s extensions to inversely predict the upside potential. In such a scenario, we could see us soaring to the next psychological level above; The first Fib extension at the 1.618 level, with a whopping $102,072 price to go along with it.

Seeing as this would land us in uncharted territory, free of price resistance shackles, it would be a very enthusiastic run above as commemorating the true beginnings of the new cycles as we have seen when previous cycles before having rallied with immense fever out of their All-Time Highs and into the clear skies above. See below for the Previous Cycles;

While you can see the earlier cycles slammed through the first Fibonacci extension with ease, with subsequent Bitcoin expansions it has met resistance shortly thereafter due to mathematical laws that as it grows in Market cap exponentially from the millions, into billions, into trillions it will become increasingly more difficult for it to grow at the same rate, due to the immense amount of capital needed to sustain that very same rate of increase becoming increasingly more difficult. In turn, this is why each new Bull market nets a lower and lower rate of return compared to the previous cycles that have come before. Charting these cycles logarithmically in contrast with each other is also something we will look at here at Stormrake in further Analyses as this Bull Market progresses.

With a bright future ahead, use this moment of respite in the market to reach out to us here at Stormrake and take advantage of our Special Halving Offer in which we have a whopping 50% Off on all BTC Orders between now and when the halving is due to take place in approximately a week’s time.

Tick Tock Next Block!

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Stormrake BTC Halving Opportunity

Wed, 10 Apr 2024 09:21:56 +1000

Stormrake is thrilled to announce that it is offering a 50% discount on brokerage fees for Bitcoin trades above $10,000. All eligible buys, sells and swaps can participate to celebrate the historic 4th Bitcoin Halving.

Significance of the event:

‘Bitcoin Halving’, an event which occurs approximately every four years, when Bitcoin's mining reward is split in half. This event has historically led to reduced Bitcoin supply and the market has seen significant increases in Bitcoin's price during the period of time after the halving.

As such, it presents a prime opportunity for traders and investors like yourselves to capitalise on potential price movements and navigate the crypto market with confidence.

What does this mean for you?

Whether you're a seasoned investor or just starting your crypto journey, Stormrake is committed to providing you with the tools and support you need to succeed. Take advantage of our discounted service fees and trade Bitcoin with ease & efficiency.

Let's navigate the crypto storm together and sign up now at Stormrake.com to embark on your crypto trading journey with us.

Remember the storm is brewing, and there's no better time to trade than now!

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BTC Blow-off! March 2024 Analysis

Mon, 04 Mar 2024 16:13:38 +1100

What a tremendous week we’ve seen in the markets in just a short span of time since our last

update two weeks ago on Bitcoin’s Price Action. There’s no denying that Bitcoin has defied short-

term expectations. It is reassuring to see that price has now not only just hit our previous target of

$59,000 from our BTC Emergency update just over two weeks ago, but it has since outperformed!

With the immense volume we’re seeing in the ETF market of which reached a record high at $7.69 Billion in volume traded in ETF’s baskets alone, it’s no wonder that price has sent us careening into a weekly high last week at $64,000 to the dollar!

An extraordinary feat in just a matter of weeks, which truly is a testament to the resilience Bitcoin maintains regardless of the trials and tribulations it faced in the wake of the 2022 Inflation crisis and broader Bearish macro-picture. Given the above you’d be hard pressed to find people who aren’t saying “We’re so back!” However, I pose the question; Are we? Does this rally keep going or do we require a correction first before a healthy re-accumulation period to really set us up coming into 2025.

Let’s dive into the data below.

As we can see the Fear & Greed Index has now reached a level of ‘80’ by the end of February,

inching higher over our last review of these metrics which landed us at a figure of ‘72’ a mere two

weeks ago. This further indicates that not only have we reached our desired price target, but from a market psychology emotion standpoint we’re historically over-extended; therefore leaving the door open for seller demand to set back into the market at such critical levels. This is where previous market participants during the 2021 Bull market that bought above $60K and have held for nearly three years may be finally having a respite on their balance sheet to proverbially “hop-off the rollercoaster” and wash their hands of the volatility without realising substantial losses. Let’s peer into how such a retracement might look.

Market psychology can be used when charting, one such useful tool to determine psychological levels of any rally or sell-off is by applying Fibonacci’s Sequence; a mathematical set of integers which can have a correlation to where the markets see value in both buying and selling demand of an asset and allows us to plot levels pertaining to such emotional reasoning. Historically, when we see much needed retracements after a substantial rally, it’s not uncommon for a retracement to head back down to the 0.618% or the lesser known 0.702% psychological level. Take a look at the retracement that began after the highs in June 2019; over a period of nine months, we retraced back down 70.2% the entire move up that began January 2019 according to the monthly close.

This level is known in Fibonacci’s as the 0.702% level and plotted us back at $6,328.35 in March 2020. Despite the volatile liquidation wick due to the Covid crash at the time, the monthly ended up closing right on this level almost to a tee, an un-likely coincidence.

Now let’s look at our current market structure below;

As we demonstrated in our last two previous analysis, we believe that the $30,000 zone of support for BTC currently stands firm where we’d expect to see strong buying demand if a broader

retracement occurs. As we can see, that would land us just $6 USD shy of our $30,000 projected

zone when we look at the 0.702% Fib level plotted on current Price Action as this gives us a figure of $29,994.49. The resemblance between the two cycles is striking. We’ve had a substantial mid-cycle bear market rally just like we did in June 2019, although with more organic bidding this time around due to the ETF’s opening the floodgates for institutional adoption allowing price to reach much closer to the All Time High this time around, although the overall trajectory may very well be the same.

The quote that “The Market doesn’t always repeat, but it certainly rhymes” comes to mind. While

this isn’t the exact same set of circumstances, we saw last cycle that led to the 2021 Bull run, it’s

paramount to be aware of the ways is which history has repeated itself on numerous occasions, of

which we will discuss in further detail in future market analysis in the coming months.

Taking advantage of this knowledge allows us to peer into possible outcomes that may lie ahead so that our clients and us here at Stormrake are better prepared leading into the 2025 market cycle!

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BTC Market Update

Thu, 15 Feb 2024 15:57:51 +1100

As of last week’s price analysis, we’ve since watched the battle of the bears & bulls, while it’s also been a week of stiff competition between both the Superbowl’s Chief’s and 49’ers, we’ve also witnessed a supercharged and energetic Crypto market.

Fueled between the prospects of a potential Federal Reserve pivot on its current monetary policy stance and the Bitcoin halving fast approaching in April of this year, its little surprise we’re seeing crypto-currency mania start to slowly creep back into a the mainstream consensus. BTC has seen a robust bounce off of the $38,400 monthly support, maintaining its local trend and in true Bitcoin nature, defying market expectations of a deeper correction for the time being. As BTC last week closed the week out with a near 14% gain in a single week, it’s taken us from $42,571 to $48,316 – a near $6000 USD upwards surge by the week’s end.

However, there are always two sides to the same ‘digital’ coin (pardon the pun!). If we have a look at the market-wide sentiment metrics, it’s clear that the recent surge has spurred on a decent amount of euphoria that comes along with such monstrous gains in a short span of time.

Upon looking at the Fear & Greed Index, it’s apparent that the market is buying all into this rally both financially and emotionally, ergo; creating a vacuum for which any less-than-stellar “Fear, uncertainty or doubt” (also known as FUD) can put a damper on this parade and send price looking for more solid support down below @ $30,000 as previously mentioned in last week’s review.

As a matter of fact, if we head over to the data coming out of USA from the FED in regards to CPI% inflation, we’ve just had the announcement of more than expected CPI (Year-on-Year) as at January 2024 come to a figure of 3.1%, which in-turn landed at 0.2% higher than market expectations. This led to a knee-jerk reaction selling-off market wide not only just in Crypto but for traditional asset classes upon the announcement earlier in the week.

Given the strength of last week’s close on BTC at $48,316, it’s not difficult to imagine the possibility of BTC looking to keep maintaining its current trend until it reaches the $59,000 prior monthly close which saw the top of the early 2021 “Crypto-elon-doge” mania, from which price then corrected a whopping -55% back down in the subsequent two months following, flushing out much of the careless speculation and “bandwagon” investing backed by excessive leverage and Elon Musk hype-tweets. I suspect this level will remain of key importance when looking for headwind resistance in the near future.

The previous monthly resistance of $48,263 will now inversely act as support for this leg up we’re seeing currently. We’d like to see this level hold to keep maintaining this current trend and leg up to higher local high’s, although given that sentiment is already at rather high levels, we’re not expecting this leg up to keep breaking through major higher-timeframe levels of resistance without any retracement.

Vigilance is key in a market bereft of sensibility, although the laser-eye memes are returning in droves – it’s historically been accurate to see the bulls be trapped prior to the real rally beginning, allowing for eagle eyed investors to sniff out an incoming opportunity to which others may be blindsided by.

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BTC The Battle of Bulls & Bears; a Price Analysis - February 2024

Fri, 09 Feb 2024 16:14:43 +1100

Bitcoin has seen tremendous bullish momentum since the beginning of 2023, rallying nearly 200% since the open of $16,530 as of Jan 1st 2023 until its recent high of $49,048 USD as at 11th of Jan 2024, erasing all the gains lost in the wake of the Luna and FTX insolvency fiascos and then some. The year-long upside retracement has seen us trend nicely into a major monthly resistance that’s holding strong at $45,600.

This level of importance has held firm from the previous high’s made in March of 2022 and was solidified further in the following month of April with a bearish-engulfing monthly close that took us down to $37,640, which ultimately led to BTC losing the entire macro bull-trend we saw since the halving of May 2020.

Naturally, a pullback was to be expected at these levels given its significance and is in alignment with how we can expect price action to work during a bear market, being that nothing ever goes up in a straight line forever. Although, the same can also be said for downside, where we’ve seen price trending up consistently since the outset of 2023, we’ve also made a strong accumulation pattern between the months of March 2023 and October 2023, which gave us an ample foundation to spring up to the current highs.

This will in turn act as a support structure on this corrective move back down we’re currently seeing now, as we’d expect to see a strong line of defence in favour of bulls sitting around ~$30,600. This is where we anticipate the majority of buying liquidity currently to be sitting and waiting on the side-lines ready to scoop but the next opportunity.

Sentiment likely will spur in anticipation with the lead up to the BTC halvening event, currently due to be expected sometime in April 2024 going by on-chain analytics. Meanwhile, we’re watching in anticipation as we’re hoping that buyers will hold the line-in-the sand for BTC at said accumulation around $30,600, and in doing so setting us up for a healthy and primed market post-halvening in April of this year.

The Crypto-currency market is sure to get interesting with this ship nearly ready to sail, so strap-in by speaking to our team here at Stormrake and allow us to help you chart a course for your investing goals in the cyber-seas ahead!

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Everyone Gets the Bitcoin Price They Deserve: Timing & Conviction

Wed, 02 Aug 2023 12:28:30 +1000

In the rapidly evolving world of cryptocurrencies, Bitcoin stands out as a pioneering stalwart. But when it comes to buying Bitcoin, there's an old adage that goes, “Everyone gets the price they deserve." This phrase may sound philosophical at first, but it carries deep financial wisdom, especially in the context of the dynamic Bitcoin market. So, what does this mean for potential investors and enthusiasts? Let's break it down.

The information contained here is for general information only. It should not be taken as constituting financial advice. Stormrake is not a financial adviser. You should consider seeking independent financial advice prior to making any personal investments.

1. Bitcoin: A Brief Overview

Before delving into the intricacies of purchasing decisions, it's essential to understand Bitcoin's background. Launched in 2009 by an anonymous entity called Satoshi Nakamoto, Bitcoin is a decentralized digital currency, free from central bank intervention. Its price is driven by supply, demand, market sentiment, and, most importantly, the conviction of its believers.

2. The Psychology of Timing

Bitcoin's price journey has been a rollercoaster. Its highs and lows are legendary in the investment world. But, those who have fared best in this journey are those who've shown conviction. Waiting too long or diving in without proper knowledge can have implications:

A. FOMO (Fear Of Missing Out): This is a typical sentiment where potential investors rush to buy Bitcoin, fearing they might miss out on a golden opportunity. Such haste often results in buying at a peak, which might not be the most strategic decision.

B. Delay Paralysis: On the flip side, some wait endlessly for the "right moment," hoping for prices to plummet. While waiting, they might miss several chances to buy at reasonable rates, only to find that, eventually, the price has soared far beyond their expectations. The old saying in traditional markets is "It's about Time in the Market, not Timing the Market"

3. Conviction: Your Strongest Ally

Conviction stems from understanding. The more deeply you grasp Bitcoin's fundamentals, its utility, and its potential future role in global finance, the more equipped you are to make informed decisions. Historically, those with the highest conviction have managed to procure Bitcoin at its lowest prices. Their secret? Knowledge and belief.

Buy when you've acquired the knowledge not when everyone is talking about it.

4. The Price You Deserve

Now, circling back to the adage, "Everyone gets the price they deserve." It's a reminder of the following:

A. Informed Decisions Matter: Dive deep into understanding Bitcoin. Familiarize yourself with its history, technology, and the challenges it aims to address.

B. Patience Pays: Investing is as much about timing as it is about choice. While waiting endlessly might not be the answer, diving in blindly isn’t either.

C. Belief is Key: If you believe in Bitcoin's value, your conviction will guide your purchasing decisions. It's not just about short-term gains but the long-term vision.

D. The power of averaging. Buy regularly to avoid buying at a high. This is called Progressive Purchasing.

5. Don't Stress the $1 Buyers

You may have heard about early adopters buying Bitcoin at under $1. While that is true you should never envy them. Firstly, they deserve what they got because they invested in bitcoin when no one had heard of it and the tech was purely an experiment. They risked their money before Bitcoin exchanges even existed and they deserve the reward. Secondly its not too late. The price you get today comes with the certainty that Bitcoin is no longer an experiment. Bitcoin will survive and has the track record to prove it. It's never too late!

Conclusion

As with any investment, the Bitcoin journey requires patience, knowledge, and belief. Whether you're a seasoned investor or a curious newbie, always remember that the right time to buy Bitcoin is when you truly understand its value. With conviction by your side, you'll inevitably find the price you deserve.

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Where are we in the Market Cycle?

Fri, 28 Apr 2023 17:23:27 +1000

The Rake Review: April 2023

April has been an interesting and volatile month (as we tend to have in crypto), with much industry news (discussed later) and market moves. Bitcoin is up around 8% for the month and the sentiment is more positive. So, it is a good time to ask ourselves where we are in the market cycle of crypto and how you can take advantage of that knowledge.

Why Market Cycles Happen:

The crypto market, like any other market, experiences cycles of ups and downs. These cycles are driven by a variety of factors such as investor sentiment (Greed and fear), the halving cycle, the macro cycle, and major developments in regulation and even major insolvencies. The cycles in crypto have historically been even more obvious than the economic cycle of boom and bust in traditional markets.

The Halving:

One of the reasons that crypto cycles have been so pronounced has been the impact of the bitcoin halving. The bitcoin halving was intentionally built into the bitcoin code. Every 4 years (roughly) the supply rate of new bitcoin halves. When bitcoin started 50 BTC were released through mining every 10 minutes, then it was 25 and so on halving every 4 years. Currently it's 6.25 per 10 minutes and the next halving is currently due 23rd April 2024 when the rate will be 3.125 BTC per 10 minutes. Generally, lower supply should lead to higher prices.

In our view the impact of these halvings over time should be reduced as the amounts we now see entering the market from miners is insignificant compared to major investors demand and the activities of funds. Also, given that the supply is already known for the next hundred years all this should theoretically be priced in. In reality, we’ve had a 4 year boom bust cycle over the last 12 years so it's highly likely we see another boom.

Market Psychology:

One of the reasons that market cycles happen is basic market psychology. Just like traditional markets, as prices rise investors get greedy and chase the prices further up. This in turn, pushes prices higher than they should have been (overheating) leading to an inevitable correction which destroys confidence and prices fall. Above is a graphic that shows this is human nature at play.

While every cycle is different and it is certainly hard to pinpoint the exact part of this cycle we can make some estimates based on the current levels of confidence and Bitcoin price action. We are certainly not in Euphoria or complacency. In the December 2022 Rake Review we noted that we may be in full blown "depression" stage. We are certainly out of that now as anger and depression are behind us. We seem to be tracking somewhere around “Hope” and “Optimism”.

To add weight to that call, below is a chart of the daily crypto fear and greed index. You might notice that the 2017 and 2021 Bull runs saw incredible readings of above 90 meaning greed had taken over which was a strong sell signal. There are also sub 10 readings covering peak fear times, the most recent of which was mid 2022 when Bitcoin had halved in price from its peak and the Luna debacle was playing out. Currently the index shows a reading above 60 showing people are actually starting to be bullish. The price of almost $30,000 USD correlates to this nicely as we have already recovered significantly from the local low’s set after FTX filed for bankruptcy.

Firstly, just knowing we are heading into a possible bull run doesn’t mean you should go out and buy all the Bitcoin you can. We have seen multiple instances of Bitcoin retesting lows as part of its recovery (most notably in late 2019- shown below) and if that happens again you might be well placed to wait and see if you can snap up some cheap Bitcoin on the dip.

In February we wrote:

“We are in a Buy the Dip environment that rewards those that have high conviction and are not afraid to buy when others are fearful. The market seems to be bouncing back after every dive rewarding steady investors.”

This statement has rung true over the last 2 months and you would have done really well buying every dip on the way.

Secondly, there is still significant risk around the macro environment. Many pundits expect a significant recession across the US and Australia as higher interest rates bite hard. If that scenario plays out we could see a credit crunch. We could see investors being forced to liquidate their bitcoin to save their home. In this scenario it would not be crazy to see a retest of $17,000 USD levels. However, if you are sitting on a position of zero you may be a little crazy because we are under a year off the halving event and there is a genuine chance you could miss the next bull run.

History Does Not Repeat Itself, But It Rhymes”. This time will be similar but different. You have to take into account current circumstances when assessing how this cycle will look. One point is the macro environment already discussed but the second point is that there is way more institutional money in the space than their was. The lows might be higher and the highs lower. With maturity comes less long term volatility. It’s also possible that the cycles shorten their span as the influence of halvings wain, bitcoin matures into an investable asset and the market increases in size. We would not be surprised if this bull run starts earlier than the 4 year cycle suggests.

If we continue to see prices lift we may well see even greater volatility. Bull runs are always volatile. Also, we may see the whales try to “shake out” retail investors that are happy with 20% returns or finally hitting break even. Hold onto your BTC if you can.

Truth in Government:

Above, is the US Treasury official projection for Budget 2023. Notice anything askew? Total Receipts in Green are 2.0 Trillion and Deficit is 1.1 Trillion (about the size of Australia’s entire GDP). Yet the Deficit looks tiny. Hmmm. I don’t think this is to scale. What if we redid it to scale?

Below is the reworked slide. Wow, that deficit looks pretty significant now. At this pace of spending and the accumulated debt along with higher interest rates, how long can the US last before printing the dollar to worthlessness?

Market Update

Top 10 cryptocurrencies by market cap

Here is the fast five of what you need to know about the market in November 2022:

Bitcoin has continued its march onwards passing $30,000 USD briefly before retesting $27,000 USD. Currently it is looking to reclaim the $30K level.
Ethereum had a great month including a flawless upgrade to Shapella. This means that stakers can now un-stake and the positive news pushed ETH past $2,000 briefly.
The total crypto market cap is well above a Trillion now.
DOGE performed well after Elon changed the Twitter bird to the DOGE logo.
BNB under performed following multiple law suits from the CFTC, SEC and Private.

Video of the month

Gary Gensler was grilled by congress for the SECs poor performance in protecting investors, as well as its lack of clarity and damage to the crypto industry as a whole.

In the news

Binance pulls the pin in dispute with the Australian regulator and cancels its AFSL. Binance also has multiple law suits lined up against it as the regulators go after them and the founder CZ for allegations of wrongdoing including trading against its clients.
Apple Launches a high yield savings account. It may be currently powered by traditional banks but this is a gateway to digital assets. Watch this space.
The significance of the BRICS expansion are starting to be noticed as the US Treasury Secretary says Sanctions could hurt the US dollar.
The SEC brings action against Bittrex
The SEC brings a wells action against Coinbase and Coinbase hits back hard. We expect Coinbase to put up a strong fight against the SECs poor guidance and enforcement heavy stance. Also, Coinbase went after a Bermuda licence and signalled a move away from the US in response to regulatory uncertainty.
Congress grills Gary Gensler’s role at the SEC. Here are 3 highlights (3-4min each)

Mr McHenry - Is ETH a security or commodity?
Mr Davidson - Big gripes with the SEC and a proposal to replace Gary Gensler & the SEC.
Mr Emmer - SEC is hurting the crypto industry and pushing it offshore.

ETH Shapella + Shanghai upgrade completed successfully, allowing users to un-stake their ETH.

Education

The Bitcoin Halving Phenomenon and the Magic Number 21 Million

Two essential aspects that set Bitcoin apart from traditional currencies are the halving events and the maximum supply of 21 million coins. In this article, we will delve into the mechanics of Bitcoin halving and examine the significance of the 21 million cap.

Understanding Bitcoin Halving

As we mentioned in the introduction, Bitcoin issuance reduces over time. Bitcoin halving occurs every 4 years or more accurately 210,000 Blocks.

The halving mechanism was implemented by Bitcoin's creator, Satoshi Nakamoto, to control the rate of new coin issuance and combat inflation. The process mimics the concept of scarcity found in precious metals like gold, where limited supply can increase value over time. The gap of 4 years between each halving plays an important effect in human physiology by having a more dramatic market cycle as people rush in as the impact of the halving takes effect. We think this was a feature not a bug.

Part of the beauty of bitcoin, is you can run your own bitcoin node, inspecting the bitcoin software, and see for yourself that your bitcoin complies to the rules Satoshi set out. Below is the section of the bitcoin code that calculates how much bitcoin is issued per block.

An explanation of the statements within is as follows:

int halvings = nHeight / consensusParams.nSubsidyHalvingInterval;

Determine which halving we are up to by dividing the current block number (height) by 210,000

if (halvings >= 64) return 0;

After 64 halvings the subsidy is no longer calculated.

CAmount nSubsidy = 50 * COIN;

The subsidy starts at 50 bitcoin per block

nSubsidy >>= halvings;

The subsidy is “halved” for every halving. ">>" is a “right shift” operator where >> 1 is half >> 2 is a quarter >>3 is an eighth etc.

The 21 Million Cap: A Finite Supply

Bitcoin's protocol dictates that there will only ever be 21 million coins in existence. This cap ensures that Bitcoin remains a deflationary currency, as opposed to traditional fiat currencies, which are often inflationary due to central banks' ability to print money at will.

The decision to cap Bitcoin's supply at 21 million coins was also influenced by the desire to create a predictable monetary policy. This finite supply, coupled with the halving events, allows market participants to anticipate changes in Bitcoin's supply and adjust their investment strategies accordingly.

Significance of Bitcoin Halving and the 21 Million Cap

The combination of halving events and the 21 million coin cap has several implications:

Inflation Control: Bitcoin's controlled supply reduces the risk of inflation, maintaining the currency's purchasing power over time. This characteristic has led some investors to view Bitcoin as a hedge against inflation.
Increasing Scarcity: As the mining rewards decrease and the number of new coins entering circulation slows, Bitcoin becomes more scarce. This scarcity can contribute to an increase in value, as long as demand for the cryptocurrency remains robust.
Mining Incentives: The halving events also serve to maintain the balance of incentives for miners. As the mining reward decreases, the transaction fees become a more significant part of miners' income, ensuring that they continue to support the network even as the block reward diminishes.
Market Predictability: The predetermined monetary policy of Bitcoin allows market participants to better anticipate changes in the cryptocurrency's supply. This transparency can contribute to more stable long-term investment strategies and more confidence in the entirety of the system.

The Future of Bitcoin and the 21 Million Cap

As of now, over 19.3 million Bitcoins have been mined, representing approximately 92% of the total supply. It is estimated that the last Bitcoin will be mined around the year 2140. As the mining rewards continue to diminish and the 21 million cap approaches, the dynamics of the Bitcoin network will evolve.

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No Advice Warning

The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.