Hi everyone, and welcome to another action-packed Enso newsletter.

Regular readers may remember a couple of years ago when I waxed lyrical about crypto assets and gave my thoughts about these will-o-the-wisp ways to get rich. In that article from 2021 (which you can read here), I gave my views on the notion that Bitcoin could reach over $100K in value (which it seemed it could at the time). Naturally, there was a caveat where I wrote:

“Of course, the journey to that price might be a heart-stopping ride. The crypto market is notoriously volatile, with huge swings being part of the ‘fun’. As a benchmark, Bitcoin is three times more volatile than oil and up to ten times as volatile as stocks and gold. Plus, where there’s little or no regulation, and everything relies on pure market sentiment, it will always be a roller-coaster investment.”

And how right I was. As soon as I posted that blog, bitcoin pressed the lift button to the basement and has more-or-less stayed there until recently, leaving many Johnny-Come-Lately investors crying into their crypto wallets.

They can’t say they weren’t warned.

In the interim, various scandals have dogged cryptocurrencies and associated exchanges, with negative commentators declaring that crypto is the bubble they predicted.

Maybe they’re right, but we’re again at a so-called ‘halving’ moment, and currently, all bets are off (or on, depending on your POV).

, Bitcoin Bounces On Imminent Halving

So What’s This Halving Thing?

Bitcoin ‘halving’ is a scheduled event built into the currency’s base code, which halves the rewards for people who mine and mint new Bitcoin. This happens roughly every four years. The purpose is to control the amount of Bitcoins in circulation, limiting the total supply to 21 million maximum.

It’s like reducing the fee for your work from £100 to £50. During halving, Bitcoin miners get fewer Bitcoins as rewards for their work, lessening the incentive to undertake this energy-intensive process

Why Is This Such A Big Deal? 

Historically, halving has had a significant impact on Bitcoin’s price. Before previous halvings, there was usually a lot of excitement in the market, which drove up prices. Then, after the halving, there’s often a period where the price stabilises, followed by a surge in price that can lead to a new price ceiling.

For example, in the last halving in 2020, Bitcoin’s price increased significantly during 2021, reaching nearly $70,000 per Bitcoin (this is where I decided to chime in!). This surge also boosted the prices of other cryptocurrencies and brought a lot of attention to the crypto market.

Then, there was the (almost) inevitable crash.

This time, circumstances are slightly different. As we approach the next ‘halving’ in April, Bitcoin’s price has risen dramatically, hitting a new all-time high in the run-up to the halving, but this time, it’s happened much earlier. So, at the time of writing, BTC is trending above $70k.

Into The Danger Zone

This early price increase has seen more market activity, including big institutional investors getting into Bitcoin. Add changes in the economy, more acceptance of Bitcoin in everyday life, and the recent approval of Bitcoin exchange-traded funds (ETFs), and the stage is set for an eventful halving.

Before you get carried away, don’t forget that this is Bitcoin, so experts are urging caution for would-be investors. There’s no clear indication of how Bitcoin will behave immediately after the halving, especially given the different market conditions from the previous halving.

Some analysts point out that Bitcoin tends to go through a “danger Zone” phase before halving, where prices often drop. In effect, we’re in new territory. So, it’s essential to be aware of these factors before making investment decisions.

You have been warned.

, Bitcoin Bounces On Imminent Halving

NFTs, Nothing For Something?

As we discuss crypto, we may as well examine another asset known as a non-fungible token (NFT). You can read my 2021 thoughts about these weird assets here.

These strange digital pictures of Bored Apes, Cool Cats, and Garbage Friends caught the popular imagination and convinced many (including me) to buy digital art. Some laid out millions for these assets, including a $2.9 million price tag for Jack Dorsey’s inaugural tweet.

And just like the South Sea Bubble or early 90s tech stocks, it all ended in tears. There was a spectacular fall from grace. The NFT market crashed harder than a brick budgie, sending shockwaves through the crypto world.

A series of scams, hacks, and exchange scandals further helped this house of cards to fold faster than an origami convention, sullying this fledgling industry’s reputation to the point that blockchain itself considered changing its name.

The move of NFTs from being the next big thing to the emperor’s new clothes was swift and savage. NFT buyers found that Bored Apes were fair-weather friends happy to spend your cash, but when you’re skint, no longer answering your texts.

You can understand the allure. With a mere “right-click, save as” on Opensea, those pricey digital art pieces instantly made you a bonafide culture vulture. Overnight, you became a collector of appreciating artistic assets without the “hefty” price tag of a Reubens.

Ars Gratia Artis

Some might not realise NFTs aren’t just digital art. There was also a series of NFTs for the gaming sector, promising actual fun alongside the ownership of digital assets. However, many NFT games turned out to be low quality, unplayable, and sometimes aligned with dodgy gambling scams—not great for brand building in a very new sector.

So Are NFTs Dead?

Many commentators have already read the last rites on NFTs, but some hawks think otherwise. For some crypto enthusiasts, there is a glimmer of hope for rehabilitating the NFT market alongside the increasing legitimisation of the cryptocurrency market.

With the SEC’s approval of Bitcoin ETFs and the upcoming Bitcoin halving event, diehard crypto fans see a nourishing light shining brightly on the associated NFT market. Maybe the crypto winter is coming to an end? Could hasty NFT buys finally come good? Perhaps it’s time to buy in or cash out.

The NFT market might rise Phoenix-like, enlivened with a sympathetic digital makeover and much-needed institutional oversight. Whether they’ll reach the heights of the buying frenzy in 2021 is debatable. However, as part of a more considered crypto portfolio without the expectation of instantaneous riches, there could still be a modest corner for an NFT or two in our asset base.

If further proof is needed, brands like Nike and Starbucks will dip their toes into the NFT pool, hoping to lure customers with virtual collectables. Even the comical Donald Trump NFTs sold for $99 in late 2022 have seen 300%+ appreciation, go figure.

Plus, AI-generated art is shaking things up, promising a flood of unique NFTs. Still, hopefully, these will be sold with a modicum of restraint and a clear-eyed understanding of the risks and volatility of any crypto product.

Proceed With Caution

Is it me, or does ‘the halving’ sound like a plot point in a low-rent sci-fi novel? It’s certainly a point of inflexion in the crypto market. For some, it’ll be a come-and-get-me moment with the potential for gain. I’m sure others are still nursing their badly burned mitts from the last bull market and will not be going back for more.

In either case, don’t take this as advice or guidance; it’s just my take on what a halving may mean. It goes without saying: do your research, and if you dive in, ensure you know the risks even if you think there’s a good chance of reward.

Whatever you do, have a happy halving, everyone!

All the best


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