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June 5, 2024

Institutions Remain Steadfast Through Fourth Bitcoin Halving: Insights from Bybit, Auros, and Nine Blocks Capital

There is this cacophony of narratives surrounding speculations about Bitcoin’s price and trading volumes in the aftermath of the fourth Bitcoin halving. However, amidst this clamor, a more fundamental question emerges: What sets this halving apart from its predecessors?

This inquiry stands as particularly significant as the crypto industry continues to mature, with institutions now officially marking their participation following the approval of spot Bitcoin ETFs.

Bybit, one of the world’s top three crypto exchanges by volume, recently hosted an AMA (Ask Me Anything) session with industry leaders. They discussed the implications of the fourth Bitcoin halving for institutions, the milestones seen in the industry since the first halving, the very recent shifting perception of the Bitcoin ecosystem, and other significant events such as the approval of BTC ETFs, trends in self-custody practices, entry barriers, the role of market makers in an even more volatile environment, and more.

Speakers line-up:

  • Ben Zhou, co-founder and CEO of Bybit
  • Jerry Li, Product Manager of Bybit
  • Le Shi, Head of Trading of Auros
  • Henri Arslanian, co-founder and Managing Partner of Nine Blocks Capital Management

Key Takeaways:

Ben Zhou anticipated that institutions trading on exchanges are not changing their strategies around the Bitcoin halving but are instead focusing more on getting the infrastructure ready. This process has been underway for at least half a year prior to the halving.

Licensed players see the ETF as an opportunity to provide an on and off-ramp for crypto industry participants, allowing for easy transitions between crypto and traditional banking. Additionally, the primary focus is on the sentiment surrounding the bitcoin ecosystem, including the development of Layer 2, and related topics. 

Henri Arslanian believed that for many institutional investors, the halving does not matter. It brings interest, but what matters more to them are the return on investment and risk factors. Therefore, navigating regulatory compliance, conducting operational due diligence, and implementing infrastructure improvements such as custody solutions are more crucial in their context.

Historical moments have been witnessed following the last halving (2020). Such as  the approval of spot BTC ETFs, the recognition of Bitcoin as legal tender in El Salvador, the exponential growth of over a hundred million Bitcoin users and so on. During the last halving, the hot topic revolved around the record levels of quantitative easing around the world.

Le Shi expressed his views on the entry barriers for both institutional and retail investors to crypto. It’s challenging for many to get involved due to scams and regulatory concerns, as banks continue to be the gateway into the crypto and digital assets industry. The adoption of crypto by the masses will heavily depend on when these access methods become more accessible to everyone and this takes time.

In the context of increased volatility, market makers play a crucial role by ensuring the availability of additional liquidity. This is essential because the costs for investors can be substantial when entering or exiting large positions.

“Every halving circle is different, but what remains consistent is the continuous improvement in infrastructure and technology. Exchanges have evolved with a multitude of innovative products at enhanced liquidity. Web3 and DeFi have flourished, providing robust self-custody solutions and expanding the possibilities for users. The technology building on each other and the layering effect is simply unimaginable and awe-inspiring.” concludes Ben.

The AMA replay is available at: https://x.com/Bybit_Official/status/1778347481434075323

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Auros tightens bid-ask spreads around the spot price to facilitate trading at a fair price, reducing costs to traders.