Currently Relevant: Edition 20

Welcome to Currently Relevant, THE RELEVANCE HOUSE’s regular roundup curating the best of news, views, and stories from the blockchain, crypto, and Web3 space.

This month: With the Bitcoin halving rapidly approaching, industry watchers are making some widely differing predictions; IndyCar star Conor Daly agrees $2.1 million sponsorship deal with Polkadot, two EVM-compatible layer-1s close new funding rounds, and a 11,196-year prison sentence for the founder of failed Turkish exchange Theodex.

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Peak Patterns: The Bitcoin halving’s highs and lows

With the next Bitcoin halving event projected to occur on April 25, analysts are watching closely to see if history will repeat itself. Every four years, the block reward for mining new Bitcoin is halved. After the upcoming halving takes place, each miner will need to spend the same amount of energy as before to mine a block, but will receive 3.125 BTC ($220,893) rather than 6.25 BTC ($441,580) if they are successful. This makes mining less attractive, reducing supply and increasing scarcity.

Historically, Bitcoin’s market cap has tended to reach all time highs between halving cycles, appreciating before and after the halving event before tailing off and undergoing a correction. If we look back to previous halving events, the first in November 2012 was characterized by marked appreciation followed by a notable market downturn a year later in November 2013, with Bitcoin’s value decreasing from $1,130 to $170 within a year, a reduction of 85%. A similar pattern was evident after the second halving in July 2016: Bitcoin’s valuation peaked at $20,000 in November 2017, only to descend to $3,191 thereafter, reflecting an 84% decrease. The most recent halving in May 2020 was followed by a record high of $68,789 in November 2021, before experiencing a downturn to $15,600 by June 2022, constituting a 77% correction.

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The reasons for these peaks and troughs are unclear. One possible explanation is that investors expect appreciation during and immediately after the halving and engage in profit-taking as soon as they see signs of a dip, triggering a downward cycle. Another commonly cited theory is “mining capitulation”, where miners with older, more energy-hungry equipment sell their assets and leave the industry because they can no longer compete. Of course, the timing of the downturns could be partially attributable to other external factors unrelated to halving cycles. For example, the prominent Bitcoin exchange Mt. Gox collapsed during the first halving cycle between 2012 and 2016, which coincided with a market downturn. 

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Some crypto insiders are suggesting that this time, it could be different, pointing to the fact that Bitcoin is more clearly regulated than ever before, while spot ETFs have attracted billions of dollars of net inflows this year. On the extremely bullish end of the spectrum, for example, Ripple CEO Brad Garlinghouse recently predicted that the total value of the crypto market will double this year to $5.2 trillion. On the other side, JPMorgan is forecasting that Bitcoin price could fall by as much as 33% once the initial halving hype subsides due to miners with less efficient rigs selling their assets and leaving the market. 

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It is not yet clear who is closer to the mark with these contrasting predictions. Market turbulence following the Iranian attack on Israel saw Bitcoin value decrease by 11.6% this week as $110 million flowed out of global Bitcoin investment products, including ETFs. However, it is far too soon to say whether this movement represents a temporary blip or a sustained trend.

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New ETPs offer regulated way to earn staking rewards in Switzerland

Swiss investors can now gain exposure and earn staking rewards from Ether and Solana through exchange-traded products (ETPs) on the SIX Exchange. The products will allow investors to benefit from staking without needing to directly manage the process. The ETPs were launched by Figment Europe and Apex Group in partnership with Issuance.Swiss AG, a Swiss-based provider of white-labeled ETPs. 

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The news came prior to the launch of two new crypto flavored ETNs by Issuance.Swiss on the Deutsche Börse Xetra digital exchange in Germany. The CF Momentum crypto ETN (ISIN : CH1263519394) aims to provide diversified exposure to leading crypto products, whereas the CF Crypto Web 3.0 ETN (ISIN : CH1263519386) offers access to selected Web3 sectors including smart contract, scaling, and data management solutions. 

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From parachute pants to pole position: Poldadot holders approve $2.1 million IndyCar sponsorship

In addition to starting a globally prominent blockchain network with an innovative multi-chain framework, Polkadot founder Gavin Wood is also known for his bold sartorial choices, recently starting a one-man revival of the parachute pants trend at the sub0 dev conference. And so, it would seem fitting that when IndyCar racing’s Conor Daly takes to the track to represent Poldadot at the upcoming Indianapolis 500, he will do so while proudly donning a white jumpsuit with hot pink trim. 

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The deal is the result of a new $2.1 million agreement which sees the automotive star become Polkadot’s new brand ambassador. In true Polkadot fashion, the proposal was even ratified by DOT holders in a referendum, passing with 95.8% approval. Unveiling the car, Daly said that the deal all started with a Twitter DM from a Poldadot community member, while also revealing that his own father is a DOT holder. This is not the first time that digital assets have been associated with the Indy500. In 2021, Ed Carpenter Racing competed with a Bitcoin-branded car crowdfunded by the Bitcoin community. The deals are among a long series of Web3 sports sponsorships signed in recent years, which we analyzed in detail in a recent data blog.

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Chain Reaction: Monad and Berachain complete funding rounds

Two EVM-compatible layer-1 blockchains received funding this month, as Monad and Berachain completed rounds of $225 million and $100 million respectively. Monad, which positions itself as a high-performance, Ethereum-compatible smart contract platform, has achieved 10,000 transactions per second (TPS) in testing. This compares favorably to the 15 TPS commonly experienced by Ethereum users, although the results will need to be borne out in real-world use. Berachain is building a novel “proof-of-liquidity” consensus mechanism that aims to improve on the degree of decentralization and liquidity of Ethereum’s standard proof-of-stake consensus. The news came as mining hardware producer Auradine completed a $80-million Series B funding round and Alpen Labs, a startup that is seeking to apply zero-knowledge proofs to Bitcoin rollups, announced the closure of a $10.6 million seed round. 

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Former Theodex founder receives staggering 11,196-year prison sentence

The founder of former cryptocurrency exchange Theodex, Faruk Özer, has been sentenced to an 11,196-year prison sentence by a Turkish judge at the Istanbul Superior Court. He had been accused of defrauding 2,027 victims out of some $43 million in assets in 2021, now worth approximately $13 million due to rampant inflation. The sentence is approximately 448 times higher than that of Sam Bankman-Fried, who was sentenced to 25 years in September 2023 by a US court following the collapse of crypto exchange FTX. Özer made international headlines in April 2021 when he fled his native Turkey for Albania, disappearing for approximately 29 months before being dramatically captured by authorities after Interpol issued a worldwide arrest warrant.  

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The judgment is a reflection of the ongoing “War on Crypto” in Turkey, which has the fourth highest trade volume of cryptocurrency transactions globally, behind only the US, UK and India. Adoption has been greatly spurred by rampant inflation in the country, which reached 68.5% in March, partially fuelled by President Erdogan’s policy of low interest rates.