Dispatch #170: 2024 - Improvement at the Core

In this patch of your weekly Dispatch:

• The devaluation of a peso 🇦🇷
• The birth of a BTC fund 🌋
• The pivot of the Fed 🏦

The Big Idea

Wishing Up on Crypto

If there was one thing crypto really needed in 2023, it was a quick recovery from the tumultuous year before. And now, a mere year later, major cryptocurrencies mark yearly highs, traders are back, and leading asset management institutions have left little doubt as to their intentions in the space – they are staying.

This has got us thinking (again): If we could have one thing going right in 2024, what would that be? In true Nexo fashion, we’ve got two lined up:

Bitcoin: Block Rewards Halving

First up is arguably the star act of 2024 – Bitcoin is gearing up for its next halving event, occurring approximately every four years after mining 210,000 blocks. The three previous halvings saw the rewards reduced from 50 to 25 BTC per mined block in 2012, 25 to 12.5 BTC in 2016; 12.5 to 6.25 BTC in 2020. Expected in early-to-mid 2024, the halving will see block rewards falling to 3.125 BTC, affecting newly-introduced supply and circulation dynamics.

Ethereum: Dencun Upgrade

Depending on your crypto preferences, it may well be that it’s the upcoming series of Ethereum Improvement Proposals (EIPs) that are more highly anticipated. Mind you, that event has already attracted attention from more than one financial behemoth. EIPs serve as the main way for updates on the Ethereum blockchain – the last one was pretty big. This time, it’s called Dencun, encompassing updates across two main fronts: “Cancun” for execution enhancement and “Deneb” for consensus refinement.

At the forefront is EIP-4844, also known as “Proto-Danksharding” which aims to lower fees and speed transactions up. Other noteworthy EIPs (EIP-1153, EIP-4788, EIP-5656, and EIP-6780) under Cancun target storage, scalability, and gas efficiency. Simultaneously, Deneb introduces enhancements through EIP-7044 and EIP-7045.

We’ll cut the class short here – both the Bitcoin Halving and Ethereum’s Dencun call for a much deeper look, which Dispatch editors will be sure to deliver. But for now, we know where our extra Christmas wishes are going.

The Latest In…

Moving Fast to Not Break Things

While Bitcoin has a built-in mechanism to protect it from inflation, fiat currencies such as the Argentinian peso have had an uphill battle. This has prompted newly-elected, Bitcoin-friendly President Javier Milei to initiate a major economic overhaul, announcing a 50% devaluation of the peso (ARS) to 800 to the US dollar. The move aims to address the country's economic emergency, marked by a staggering 143% annual inflation rate and widespread poverty. Economy Minister Luis Caputo acknowledges short-term challenges, attributing them to Argentina's fiscal deficits. The devaluation coincides with a cooling-off of Bitcoin prices in Argentina, following (another) recent all-time high.

The Latest In…

Bitcoin Mining and Volcanos: The Perfect Match

El Salvador's awaited Bitcoin (BTC) bonds have gained regulatory approval for an early 2024 issuance, according to the National Bitcoin Office. President Nayib Bukele confirmed the news, expressing anticipation for the “Volcano Bond” next year. Initially announced in 2021, the bonds aim to raise $1B for a Bitcoin-backed initiative, fostering a renewable energy-based mining industry utilizing the country's active volcanoes.

The Latest In…

The Fed Effect

Many were happy with Bitcoin’s price settling just above $41,000 this week – who wouldn’t be? А 10% price spike followed mid-week to bring BTC above $43,000. What could that be attributed to? It’s the almighty U.S. Fed headed by Chairman Jerome Powell, serving the latest Interest Rate decision and economic projections for the world’s largest economy. Here are the main points:

• Federal Reserve Decision: Interest rates remain unchanged, maintaining the federal funds rate target at 5.25-5.50%.
• Monetary Policy Outlook: A tighter monetary policy is projected in 2024 with median forecast setting the federal funds rate at 4.6% by the end of 2024.
• Market Expectations Shift: Anticipation of more cuts in 2024 appears in line with the Fed’s signals that the policy rate is likely at or near its peak for this tightening cycle.

The Latest In…

Nexo’s Crypto Bundles

This week has seen us introduce another submission from our community-driven product roadmap – the Crypto Bundles are here! Designed to provide hassle-free, one-click access to specific crypto sectors, the bundles are suitable for both beginners and seasoned investors. With a minimum order size of just $1 per asset and a maximum limit of $500,000, these baskets open the door for users to easily diversify their portfolios with five separate categories: Essentials, Blockchains, DeFi, Web3, and Exchange Tokens.

(custom-button: Browse Crypto Bundles link: https://platform.nexo.com/uni/dashboard)

The Week’s Most Interesting Data Story

BTC Mining: Far From Over

As Bitcoin gears up for its upcoming halving at block 840,000 in April 2024, the cryptocurrency's fixed supply system, distinct from traditional currencies, holds over 19.4 million Bitcoins in circulation, constituting 92% of the total supply. Anticipated to hit its maximum of 21 million BTC tokens by 2140, Bitcoin's halving cycles every 210,000 blocks ensure clarity, certainty, and predictability in its ecosystem.

Hot Topics

What the Community Is Discussing

It’s gotta be good, coming from Michael.

That’s a star cast of investors…

Some tech-saviness required. 👆

What to Watch for Next Week:

• Are we seeing BTC halving effects yet?
• Where is ETH going in 2024?
• Is the spot Bitcoin ETF a given?