Bitcoin Halving Best Buys | Crypto Managed Accounts From Abra

The asset manager’s new short-term credit fund is hosted on the Ethereum blockchain.

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Mitchell Martin Senior Editor, Forbes Money & Markets
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Steven Ehrlich Director, Forbes Digital Assets
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POTENTIAL WINNERS IN BITCOIN MINING SHAKEOUT

With the fourth bitcoin halving expected at about the same time this newsletter hits your inbox, this is an opportune moment to think about investments that may benefit from the changing circumstances of the senior cryptocurrency.

The halving reduces the reward for updating the Bitcoin blockchain to 3.125 tokens from 6.25. On the face of it, that seems like bad news for companies that specialize in the power-hungry creation of new bitcoin, which is known as mining, but a more nuanced view is that stiff competition for a diminishing resource could lead to survival of the fittest miners while weaker players fail or are acquired. (This Darwinian view is at odds with the idea that cryptocurrencies are meant to be free of centralized control, but that is not how free markets work.)

“The game is no longer about being on the low end of the cost curve,” says Amanda Fabiano, founder of mining-focused Fabiano Consulting. “A miner must be on the low end of the cost curve and have access to capital at a low cost.”

Among publicly traded companies that fit that bill, have modest debt loads and have recently raised equity to finance efficiency improvements are CleanSpark and Riot Platforms.

TO HALVE AND HAVE NOT

The halving is expected to support the bitcoin price, as have the three previous occurrences, but this has been a rough week for the cryptocurrency, which is down 4% over the past seven days to $64,247.

That might just be profit-taking after a rally that has seen bitcoin quadruple from below $16,000 in November 2022 as the crypto winter reached its darkest days with the failure of the FTX exchange, but it doesn’t quite match the pattern of the previous halvings. Bitcoin reached a record at $73,738 on March 14, bolstered by the availability of U.S. exchange-traded funds that can invest directly in the tokens as well as the upcoming supply reduction, but has now retreated to early-March levels.

“Bitcoin hit its all-time high far earlier than prior halving cycles would indicate,” says Tom Enneking, managing partner of crypto-investment-product-provider Psalion.

Other analysts pointed to macroeconomic forces such as the military actions in Ukraine and Gaza, lowered expectations for the start of monetary easing in the United States and profit-taking.

CURRENT PRICE OF TOP 5 COINS (7-Day % Change)

Coin

Price

Percent Change

Bitcoin (BTC)

$64,247

3.6%

Ether (ETH)

$3,097

3.9%

Tether (USDT)

$1.00

0.1%

Binance Coin (BNB)

$560

3.8%

Solana (SOL)

$145

4.6%

Sources: Forbes Digital Assets, CoinGecko. Prices as of 4:00 p.m. on April 19, 2024.

PRESTO CHANGO: ABRA REAPPEARS TARGETING INSTITUTIONS

Bill Barhydt’s Abra is a rare digital-asset lending company that survived the crypto winter that overwhelmed rivals such as Celsius and Voyager. But the Silicon Valley company has not exactly thrived, and it had to shutter its domestic retail business after regulators in Texas and other states alleged that it was selling unregistered securities.

Now Abra, which managed as much as $1 billion at its peak, is back and targeting private clients, family offices, hedge funds and other institutional investors, as well as retail customers outside the U.S. In February, the Securities and Exchange Commission approved its subsidiary Abra Capital Management as a registered investment advisor.

The firm has close to $450 million in assets across spot and options trading, borrowing, lending, staking, yield and asset management services, according to Barhydt, the founder and CEO.

“We have significantly improved the way you can access the same products as before, without taking those third-party or counterparty risks that were inherent in the lending system,” he says. Barhydt adds that he has signed up about 200 institutions and 200,000 retail clients who seek to borrow against their crypto investments. The revived company uses separately managed accounts that provide customization for clients that are unavailable with fund investments.

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