Key Points
- Bitcoin has completed its 4th halving, reducing mining rewards to 3.12 BTC from 6.25 BTC.
- The demand for Bitcoins has significantly increased, exceeding the supply by more than 2x.
Bitcoin’s value experienced a downturn immediately following a crucial event. The divide between Bitcoin’s supply and demand is projected to grow even more.
In the early hours of 20 April GMT, Bitcoin completed its 4th halving, an event highly anticipated by many. This halving resulted in the reduction of mining rewards to 3.12 BTC from the previous 6.25 BTC. The halving took place when the 840,000th block was added to Bitcoin’s blockchain.
Price Volatility and Market Response
In the weeks leading up to the halving, Bitcoin’s price charts showed much volatility. At the time of writing, BTC’s value was $63,370, a nearly 2% decrease in the last 6 hours alone. Indicators suggested bearish tendencies with the Moving Average positioned well above the price candles. Conversely, the CMF was well above zero, indicating positive capital inflows.
Bitcoin was designed as a deflationary currency, meaning its supply would gradually decrease with each halving until it reaches the hard cap of 21 million. This supply squeeze matched with growing demand could enhance its prospects as a store of value asset, similar to how gold is perceived in the mainstream.
Historical Increase in Value Post-Halving
Historically, the king coin has increased in value after each halving. For instance, the halving in July 2016 was followed by a 3x increase in BTC’s value over the next 12 months. Similarly, the last halving in May 2020 resulted in the king coin surging by 500% in the following year.
The latest halving is significant as it occurs during what appears to be a bull market phase. Bitcoin demand has soared following the listing of spot exchange-traded funds (ETFs) in the U.S earlier this year. These new investment avenues have attracted a Cumulative Total Net Inflow of over $12.23 billion since their listing, averaging nearly $120 million in Bitcoin flowing into these funds daily.
On the other hand, Glassnode’s data shows that the number of new Bitcoins being mined daily averaged at $50 million. This indicates that the demand is exceeding the supply by more than 2x, and with the supply set to decrease further, this gap is expected to widen, potentially triggering a Bitcoin rally.
