April 17, 2024

Bitcoin's fourth mining-reward halving is just two days away. The quadrennial event will reduce BTC's per block emission to 3.125 BTC, cutting the pace of new supply by 50%. Previous halvings preceded massive multimonth rallies in BTC, and the crypto community is confident history will repeat itself. Investment banking giant Goldman Sachs, however, cautioned its clients from reading too much into the past halving cycles. "Caution should be taken against extrapolating the past cycles and the impact of halving, given the respective prevailing macro conditions," Goldman's Fixed Income, Currencies and Commodities (FICC) and Equities team said in a note to clients on April 12. The macroeconomic environment on those occasions differed from today's high inflation, high-interest rate climate.

According to broker Bernstein, the “miner fear factor” is at its peak ahead of the halving, and investors should buy outperform-rated Riot Platforms (RIOT) and CleanSpark (CLSK) because the market will reward these companies for their superior execution and for being market leaders by self-mining hashrate. Bernstein notes in a research report that mining stocks have continued to underperform bitcoin (BTC) year-to-date as the halving raised concerns over profitability once the rewards are slashed. The event is due around April 19-20. Hashrate refers to the total combined computational power that is being used to mine and process transactions on a proof-of-work blockchain. “Historically, bitcoin price breakout has always followed the halving event and sometimes a few months after halving,” analysts Gautam Chhugani and Mahika Sapra wrote.

U.S. Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) are taking another swing at crypto-specific legislation, with a narrowly tailored bill seeking to define how stablecoins – cryptocurrencies that maintain value with some other asset or currency – will operate in the U.S. The lawmakers unveiled a new stablecoin bill Wednesday in the latest effort to create legislation directly addressing this corner of the crypto market. Under their proposed bill, payment stablecoin issuers would have reserve and operational requirements, including needing to create subsidiaries specifically to issue stablecoins. The bill would also require stablecoin issuers to deal in dollar-backed tokens.

So much of the cryptocurrency industry lives in the ether, figuratively or literally: data moving around blockchains, lines moving up or down on price graphs and other largely intangible things.

But a hot emerging trend that has venture capitalists salivating promises a direct tie to the real world: running infrastructure with blockchains. Projects like the Helium protocol, which drives a wireless network with a token-powered ecosystem, or Filecoin's data-storage platform.

The not-so-catchy term for all this is decentralized physical infrastructure networks, which usually gets shortened as DePIN. A catchy amount of money has already been invested, a sign venture capital firms see potential. According to a Crypto.com report, the top DePIN projects have raised more than $1 billion combined.

"We believe DePIN is a category that has the potential to host a killer app with a billion users," Pranav Kanade, a portfolio manager of VanEck's digital assets alpha fund, said in an interview. "These users would be using public blockchains without necessarily realizing they are interacting with a crypto product."

- Omkar Godbole