Fewer Bitcoins entering circulation post halving will be met with an increased demand from spot Bitcoin ETF issuers, which will lead to a “continuous, but volatile upward grind” in price, a mining analyst says.
However, Bitcoin’s supply-demand dynamic will be even more favorable than previous halvings in 2012, 2016 and 2020 — thanks to the recent launch of spot Bitcoin exchange-traded funds (ETFs) in the United States.
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Halvings result in Bitcoin miner rewards being halved each cycle. It occurs every 210,000 blocks, which is approximately every 48 months.
This halving event will occur at block 840,000 — expected to take place on April 20 — which will see mining rewards reduced from 6.25 BTC ($418,800) to 3.125 BTC ($209,400).
History suggests Bitcoin’s price starts ticking upwards to break previous all-time highs about four or five months after the halving.
This occurred in the last halving on May 11, 2020, when Bitcoin was priced at $8,750. It surged 430% five months later, from $11,500 to $61,300 by mid-March 2021.
In doing so, it smashed the previous all-time high of $19,665 on Dec. 16, 2017.
Analysts have largely attributed this to the spot Bitcoin ETFs, which have caused a radical change in Bitcoin’s supply-demand dynamic, according to Jaran Mellerud, a founder and chief strategist at Hashlab Mining, who recently spoke with Cointelegraph.
Spot Bitcoin ETF issuers are taking in 2,450 BTC each day while only 900 BTC are being mined, Mellerud noted.
“This number will fall to 450 BTC post-halving in late April [where the ETFs will be] sweeping up BTC at a rate five times higher than BTC’s post-halving supply growth. This huge imbalance between supply and demand will lead to a continuous, but volatile, upward grind of the BTC price.”
This will multiply Bitcoin’s demand at a time when the halving will reduce Bitcoin’s supply, noted Hougan, who expects Bitcoin’s price to rise “substantially higher” as a result.
Bitcoin is now more decentralized and secure
The health of the Bitcoin network has strengthened too, according to Mellerud, who noted Bitcoin’s hashrate is five times higher than it was at the last halving.
“It now requires five times more computing power and associated electricity supply, electrical infrastructure, and mining hardware to attack the network.”
The network was already tremendously secure at the time of the 2020 halving, but now it is basically impenetrable, Mellerud added.
Mellerud noted that Bitcoin’s hashrate is now more widely distributed than what it was at the time of the last halving, where Chinese miners controlled a large share of the network.
“This geographic decentralization is continuing as miners migrate to Africa and Latin America to take advantage of cheaper electricity prices,” he said.
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