The Bitcoin Halving Happened, Runes Are Making Miners Money & Hong Kong Has Bitcoin ETFs Now

From the Bitcoin halving to the launch of new Bitcoin-native tokens and new spot ETFs launching in Hong Kong, there’s lots to talk about from the world of Bitcoin.  

So let’s jump right in! 

The Next Bitcoin Epoch Is Here

It’s been more than four years since we last witnessed a Bitcoin halving. Back in 2020, the price was $8,620. A few weeks later, we already reached new all-time highs. 

This time around, we witnessed another halving. On April 19th, the block reward dropped from 6.25 BTC to 3.125 BTC. And the best thing about this? No one had to do anything! 

This function was programmed into the protocol. Thanks, Satoshi! 

Following the halving, the price of Bitcoin dipped from mid-60k to mid-50k. That was a significant drop from this year’s new all-time high of around $73k. 

But that’s nothing new. 

In fact, in all the previous halvings, we’ve seen a dip before the price took off in the other direction. 

I wouldn’t be surprised if we saw the same thing happen this time. 📈

However, one thing is different in 2024: We now have the big boys of Wall Street in the game, and more institutional players are investing in Bitcoin via the spot ETFs. 

The sheer volume of Bitcoin these guys buy is astonishing and, if you do the simple math, there is now only 450 BTC per day that’s being issued, and the supply shock will take effect. 

We’ll soon be on a rocket heading to the fricking moon if things continue the way they have since the launch of the spot Bitcoin ETFs. 🚀

Plus, central banks are struggling big time. Inflation is back on the menu, and they will have to look for alternatives other than gold or printing money. 

Bitcoin could be such an alternative, and now, with the ETFs in play, central bankers would have an easy solution to save their jobs. I'm just saying, in case any of them reads this…

Hong Kong Is Bullish on Spot Bitcoin ETFs 🇭🇰

I just spoke about central banks who can save their asses by stacking spot Bitcoin ETF shares on Wall Street. 

However, there is a new kid on the block now! 

Hong Kong launched spot Bitcoin ETFs on April 30, enabling easier access to spot Bitcoin ETFs for Asian investors. 

But there is a catch: The Hong Kong financial markets are closed off for mainland China. 

So, technically, Chinese investors don’t have the opportunity to invest in these ETFs. 

Hong Kong is a de facto part of China but still - largely - has its own laws, rules, and regulations. However, for Hong Kong to approve these ETFs, the Chinese government must have given the Bitcoin ETFs some degree of approval. 

In light of China’s ban on cryptocurrency mining and trading, this is a good sign that suggests that the mainland Chinese authorities haven’t closed the door on Bitcoin entirely. 

Perhaps they have started to recognize that Game Theory is coming into play when it comes to Bitcoin, where countries that don’t HODL (or mine Bitcoin) will be left behind as this “digital gold” becomes increasingly more valuable. 

While there has been no indication (yet) that the People’s Bank of China is buying Bitcoin (via the ETFs or otherwise), Hong Kong-based entities of Chinese banks and other financial institutions can purchase spot Bitcoin ETFs now. 

Runes Tokens Are Making Miners Money ♅

I’m very bullish on the building on Bitcoin movement, whether it’s Ordinals, Layer 2 scaling solutions, or new token protocols such as BRC-20. 

All of these protocols allow developers to be creative and come up with new solutions to utilize Bitcoin’s potential to its fullest. 

Interestingly, new on-chain token protocols are beneficial for miners, as they enable them to make money with transaction fees as on-chain Bitcoin token trading activity contributes to higher Bitcoin network fees. 

This month, a new type of token called Runes emerged on Bitcoin and, in my humble opinion, it’s pretty badass. 

Runes is different from other Bitcoin token protocols, such as BRC-20. It improves on the shortcomings of its predecessors by reducing the on-chain footprint of minting and trading tokens on Bitcoin.  

Operating on a UTXO-based model, Runes are fungible tokens minted on the Bitcoin blockchain that don’t rely on off-chain data.  

The protocol designates the token supply, ID, and output of a Runes token to a specific UTXO using the OP_RETURN function to create a Runes protocol message called a runestone. New Runes tokens are created by “etching” them onto a UTXO, which then allows others to “mint” the token, and subsequently trade it. 

As of now, the Runes token market is dominated by memecoins, similar to BRC-20 last year, but it will be interesting to see how the Bitcoin-native token market will evolve in the coming years.

Bitcoin’s Disinflationary Nature Is a Feature and Not a Bug!

My latest guest on the Proof of Words podcast is a legend in the Bitcoin community! 

I had the privilege of having Jeff Booth, the author of ‘The Price of Tomorrow’ on the show. Jeff’s the head of Ego Death Capital, a VC firm that invests in the Bitcoin ecosystem and nurtures the next wave of amazing financial and messaging companies. 

In our chat, we discussed the fact that the natural state of the market should be deflationary, providing more value to society over time and that Bitcoin could be a useful tool for this. 

However, our current credit-based monetary system distorts this natural progression, leading to a perpetual cycle of debt and inflation that benefits a select few at the expense of the many.

I’m not going to lie. I could have talked to Jeff for hours, and I hope you enjoy this episode as much as I did! 

Your stacker in sats,

Patrick Lowry