Behind the BTC surge

Is “the halving” driving BTC’s surge? There are as many theories about what has driven BTC north of USD 72k as there are pundits talking up the asset class, but one theory gaining a lot of currency in recent days attributes it to “the halving.”

Uh, Enterprise? What that [redacted] are you talking about? “The halving” (BTC bulls insist it is “The Halving, a proper noun) is a mechanism built into the cryptocurrency designed to control the supply of new coins — effectively ensuring it remains valuable.

How it works: BTC has a built-in limit of 21 mn coins. The halving is a programmed event (architected by BTC’s pseudonymous creator, Satoshi Nakamoto) that cuts the reward for miners in half, roughly every four years, thus controlling supply and making it hard to hit 21 mn coins in circulation (cf: Zeno’s Paradox).

It’s happened before: When BTC was first introduced, the reward for mining a block (IYKYK) was 50 BTC. The reward dropped to 25 BTC in 2012 (the first halving), then to 12.5 BTC in 2016, and to 6.25 BTC in 2020.

Why is it important? The idea is that the halving makes it less attractive for “miners” to make BTC, thus slowing its production and putting a floor under the price — kind of like OPEC+ output cuts designed to make sure oil remains expensive.

When will the “halving” happen? Nobody knows for sure, but most likely in April, it seems.

How is it impacting price? Some pundits think the prospect of tighter supply going forward is behind BTC breaking the USD 72k barrier for the first time a few weeks back.

THE MARKETS THIS MORNING-

Asian markets are trading sideways this morning after Wall Street’s tech rally appeared to lose momentum, CNBC reports. Futures suggest major European benchmarks are also heading for a mixed open, while things are looking up on Wall Street: Futures inched higher overnight as traders shrugged off a 46% slump in EV maker Fisker’s shares after the Wall Street Journal suggested it had hired bankruptcy advisors.

THE CLOSING BELL-

The ADX rose 0.2% yesterday on turnover of AED 1 bn. The index is down 3.5% YTD.

In the green: RAK Co. for White Cement and Construction Materials (+6.9%), GFH Financial Group (+5%) and Easy Lease Motorcycle Rental (+4.7%).

In the red: National Corporation for Tourism and Hotels (-4.9%), Sudatel Telecommunications Group (-2.5%) and Response Plus Holding (-2.3%).

Over on the DFM, the index closed up 0.2% on turnover of AED 1.2 bn, while Nasdaq Dubai is up 0.3%.

CORPORATE ACTIONS-

Shuaa Capital is seeking bondholders’ approval to change the terms of a USD 150 mn bond issuance, due on 31 March, according to a DFM disclosure (pdf). The investment bank approved the bonds back in October 2020 (pdf), priced at a coupon of 7.5% and listed on the London Stock Exchange’s International Securities Market. It has since extended their maturity date once last year.

Refresher: Shuaa saw its net losses deepen more than fivefold over the past year. The asset management firm has since accepted resignations from some of its senior management.

Abu Dhabi National Oil Company (Adnoc) approved a dividend payout of AED 1.32 bn for 2H 2023, bringing total dividends for the year to AED 2.63 bn, according to an ADX disclosure (pdf).