As a part of Bitcoin’s (BTC) protocol, Bitcoin halving takes place every four years. This is an event where new BTCs created with each block added to the blockchain are reduced by half. In essence, the purpose of Bitcoin halving is to adjust the issuance rate of new bitcoins.
The halving is set to happen after every 210,000 blocks are mined. This roughly takes four years given the average block time of 10 minutes.
With the recent Bitcoin mining reward halving, there have been shifts in the market that have affected various aspects like crypto gamble activities. Bitfinex predicts that the demand for BTC will exceed its supply x5.
This means that the daily addition of new BTC supply to the market may drop to $30 million. In terms of past halvings, this is lower than the average daily inflows into spot-based ETFs.
The impact of halving on Bitcoin’s supply
The Bitcoin mining reward halving event reduces the amount of BTC to miners for each block they mine. It went from 6.25 BTC to 3.125 BTC. This means that the number of new coins being added to the overall supply every day is expected to go down. Bitfinex analysts predict that the total value of the new supply will go down to $30 million per day which is a massive drop.
Surging demand in comparison to supply
The estimated daily supply of new BTC from Bitfinex would be around $40-$50 million in terms of USD after the halving event. Compared to the average daily demand for US spot ETFs ($150 million), this is way lower. With this, the demand for BTC is predicted to exceed its supply by a massive amount.
Decreased coin issuance and supply squeeze
With the halving, the daily addition of new coins to the BTC supply has undoubtedly reduced. Glassnode’s data suggests that the daily coin issuance dropped to 450 BTC (equivalent to around $30 million).
In comparison, there was an average of 900 BTC per day before the halving. This new number of newly minted coins contributes to a limited supply. With that, it could potentially lead to an increase in the value of Bitcoin.
Investors shift towards direct custody
Bitfinex analysts report that investors are showing a growing interest in directly holding their BTC. This trend suggests a growing preference for self-custody solutions on third-party custodians. With direct custody, investors have complete control and ownership of their coins. This could potentially contribute to a decrease in the available supply of BTC.
Potential impact on miner selling
Before the halving, miners and entities responsible for creating new coins depleted their coin inventories. This is to buy equipment upgrades, securing the sustainability of their operations after the halving.
As the supply shortage becomes more pronounced, there is a chance that miners may reduce their selling activities. This, combined with the decreased issuance of new coins, could intensify the scarcity of BTC and potentially increase its price.
The post-halving supply and demand dynamic in the BTC market shows a scarcity of coins. It also indicates a limited supply and growing market interest in Bitcoin. It will be intriguing to see how these dynamics unfold and their impact on Bitcoin’s price and the overall direction of the crypto gamble market.
