Bitcoin enthusiasts, rejoice! Analysts at Bitfinex predict a dramatic shift in the Bitcoin market following the recent halving event. Get ready for a potential scenario where demand for Bitcoin outstrips new supply by a staggering 5 times.
The Halving Cuts New Supply, But Demand Surges
The recent halving, which cut the block reward for miners in half, has significantly reduced the daily issuance of new Bitcoins. According to Bitfinex, this translates to a notional value of just $30 million worth of new BTC entering the market each day.
Here’s the kicker: This new supply pales in comparison to the massive daily inflows currently observed in spot-based Bitcoin ETFs, which average over $150 million.
Why the Supply Squeeze?
Several factors are contributing to this potential supply crunch:
- Reduced Miner Issuance: The halving itself directly cuts the daily issuance of new coins.
- Miner Inventory Depletion: Many miners strategically sold off coins leading up to the halving to fund equipment upgrades, further reducing available supply.
- Rise of Self-Custody: Investors are increasingly taking their coins off exchanges and into secure cold storage, removing them from the readily available market pool.
Is This Sustainable?
While the future remains uncertain, there are positive signs:
- ETF Inflows: Continued investor interest through spot-based ETFs could maintain the high demand for Bitcoin.
- Reduced Miner Selling: With pre-halving upgrades likely complete, miner selling pressure may ease.
The Bottom Line:
The recent halving has fundamentally altered the Bitcoin market. With a potential supply squeeze on the horizon, demand for Bitcoin could significantly outpace new issuance, potentially leading to price increases. While some uncertainties remain, this scenario paints a bullish picture for the future of Bitcoin.
