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A Contradictory Halving

02 Apr, 2024 3 min read
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There are about 20 days left until the Bitcoin halving, the event when coin minting is halved to 3.125 BTC per block. At a price of $70,000 per BTC, that would be an $11.5 billion reduction in inflow year over year.

Image source: coinwarz.com

Halving ensures Bitcoin's long-term price growth and binds it to four-year cycles. Issuance is reduced every 210,000 blocks or once every four years. In previous cycles, a new record-high price was set after the halving event. This time, it happened prior to it.

Image source: twitter.com/therationalroot

The reason for this was spot Bitcoin ETFs, which created a significant advantage for the demand side. To date, they have accumulated $12 billion worth of cryptocurrency, which already exceeds the upcoming halving's annual impact on the market balance. The following chart illustrates their effect:

Image source: grayscale.com

If crypto ETFs continue to buy Bitcoin at this speed, the market will face a supply shock after the halving. A shortage will emerge that will push the price to a six-digit figure this year.

Image source: StormGain Cryptocurrency Exchange

At least, that's where things are headed at the moment. Whales and sharks have started accumulating again, activity in the spot market remains low, and the supply of Bitcoin in crypto exchanges has hit a five-year low. There are increasingly fewer people willing to get rid of their coins at current prices.

Image source: grayscale.com

Investors should be cautious, however. Halving is an irreversible procedure, but ETF buyers can switch to selling at any time. One possible trigger for a correction could be the halving itself. 

The drop in income will force some miners to sell off their reserves, the total volume of which is estimated to be 1.8 million BTC or $125 billion. 

Image source: cryptoquant.com

If whales join them to play out the 'buy the rumour, sell the news' scenario, a correction will take place. Its strength and duration will depend on ETF investors' resilience and the ability of miners to quickly adjust to new realities.


StormGain Analytical Group 
(platform for trading, exchanging and storing cryptocurrency)


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