Bitcoin’s supply and demand dynamic will be even more favorable than after previous halvings in 2012, 2016 and 2020, thanks to the recent launch of spot Bitcoin exchange-traded funds (ETFs) in the United States.
Bitcoin (BTC) halvings cut miner rewards in half every 210,000 blocks, which is approximately every 48 months.
The next halving event will occur at block 840,000 — expected to take place on April 20 — and will see mining rewards reduced from 6.25 BTC ($418,800) to 3.125 BTC ($209,400).
History shows Bitcoin’s price starts ticking upward to break previous all-time highs about four or five months after the halving.
On May 11, 2020, during the previous halving, Bitcoin was priced at $8,750. It surged 430% five months later, from $11,500 to $61,300 by mid-March 2021.
In doing so, it smashed the previous all-time high of $19,665 on Dec. 16, 2017.
Analysts have primarily attributed this to spot Bitcoin ETFs, which have caused a radical change in Bitcoin’s supply and demand dynamic, according to Jaran Mellerud, a founder and chief strategist at Hashlab Mining, who recently spoke with Cointelegraph.
Spot Bitcoin ETF issuers are scooping up 2,450 BTC each day while only 900 BTC are mined, Mellerud noted.
“This number will fall to 450 BTC post-halving in late April [where the ETFs will be] sweeping up BTC at a rate five times higher than BTC’s post-halving supply growth. This huge imbalance between supply and demand will lead to a continuous but volatile upward grind of the BTC price.”
This will multiply Bitcoin’s demand at a time when the halving will reduce its supply, said Mellerud, who expects Bitcoin’s price to rise substantially higher as a result.
Bitcoin is now more decentralized and secure
The health of the Bitcoin network has also strengthened, according to Mellerud, who noted that Bitcoin’s hash rate is five times higher than it was at the last halving.
“It now requires five times more computing power and associated electricity supply, electrical infrastructure, and mining hardware to attack the network.”
The network was already tremendously secure at the time of the 2020 halving, but now it is basically impenetrable, Mellerud added.
Related: Bitcoin mining battles 2023 — Surging hash rates test industry limits
Mellerud noted that Bitcoin’s hash rate is now more widely distributed than at the time of the last halving, where Chinese miners controlled a large share of the network.
“This geographic decentralization is continuing as miners migrate to Africa and Latin America to take advantage of cheaper electricity prices,” he said.
