Key Points
- A crypto analyst predicts a significant supply shock for Bitcoin (BTC) when the network halves its miner rewards in about two months.
- The halving event, which occurs approximately every four years, will significantly reduce the number of new coins entering the market, potentially leading to price inflation.
- The daily Bitcoin mining output, currently at 900 BTC, will drop to 450 BTC post-halving.
- Recent developments, such as the approval of spot Bitcoin ETFs by the SEC, could exacerbate the supply shock.
- Spot Bitcoin ETF issuers have accumulated over 160,000 BTC since their launch in January.
- If the current daily inflow of 5,800 BTC continues, it could surpass the number of newly mined coins after halving, leading to a significant supply-demand imbalance.
A crypto expert has expressed a bullish outlook on Bitcoin (BTC), predicting a significant “supply shock” when the network halves its miner rewards in roughly two months.
This reduction in new coin output is expected to make Bitcoin deflationary, potentially driving up prices due to increased demand.
The Bitcoin Mining Event In Focus
Ted, a crypto analyst, anticipates that BTC prices will rise following the Bitcoin halving event scheduled for April 2024.
This event, which takes place at the protocol level approximately every four years, will significantly reduce the number of new coins entering the market.
Currently, the Bitcoin network disburses 6.25 BTC roughly every 10 minutes, equating to 900 BTC mined daily.
After the halving event, this figure will decrease to 450 BTC per day.
This sharp contraction in supply could lead to a supply shock, particularly in light of recent developments such as the approval of spot Bitcoin ETFs by the United States Securities and Exchange Commission (SEC) in mid-January 2024.
Spot Bitcoin ETFs allow investors to gain direct exposure to Bitcoin without the need to manage private keys, a responsibility typically delegated to a regulated custodian like Coinbase.
Spot Bitcoin ETF Issuers Buying More Coins
Since their introduction in January, spot Bitcoin ETF issuers have accumulated over 160,000 BTC, according to Ted.
The key factor to consider, he says, is the rate at which these ETFs are accumulating Bitcoin.
If the current daily inflow of 5,800 BTC continues, it could easily surpass the number of newly mined coins post-halving, leading to what Ted describes as a “supply shock of all supply shocks”.
This situation, where demand significantly exceeds supply, could potentially drive up the price of Bitcoin.
Ted also notes that coins held by spot Bitcoin ETF issuers like BlackRock and Fidelity are rapidly catching up with those held by MicroStrategy, a business intelligence company.
Bitcoin Treasuries data reveals that MicroStrategy controls 190,000 BTC, and the company purchased an additional 850 BTC on February 6.
Meanwhile, Lookonchain data shows that spot Bitcoin ETF issuers purchased 4,189 BTC on February 6, while Grayscale sold off 3,427 BTC.
As of February 6, issuers such as BlackRock, Fidelity, Bitwise, and others control 659,401 BTC.
This figure continues to rise and now exceeds that of MicroStrategy, although it includes those held by the Grayscale Bitcoin Trust (GBTC), which is gradually being liquidated.