Bitcoin Halving Approaches: Market Impact and Expectations of Surging Prices
Summary:
The Bitcoin issuance rate is set to decrease by half due to the upcoming Bitcoin halving in about 34 days. However, this reduced supply doesn't seem to be factored into the cryptocurrency market according to Basile Maire, co-founder of D8X. Bitcoin exceeded $71,000 on March 11 and future data suggests it might reach $100,000 by May. The upcoming US presidential election could impact Bitcoin's price evolution, and Spot Bitcoin ETFs are buying nearly ten times more Bitcoin daily than what miners produce.
The Bitcoin (BTC) issuance rate is set to decrease by fifty percent in about 34 days due to the Bitcoin halving event. However, this reduction in supply seems not to be factored into the current cryptocurrency market, suggests Basile Maire, ex-executive director at UBS, and co-founder of the D8X decentralized exchange. Maire asserts that the traditional laws of economics indicate upwards price momentum when supply decreases and demand rises. Therefore, it is likely that the imminent Bitcoin halving hasn't been fully integrated into the current prices.
On March 11, Bitcoin's value exceeded the $71,000 limit for the first time ever, just 37 days prior to the halving which will decrease the block rewards from 6.25 to 3.125 BTC per block. Recent data on Bitcoin futures suggests that Bitcoin might reach the $100,000 mark by May says Maire, evidenced by the surge in open interest for $100,000 in May, though the volume isn't particularly high.
Additionally, the impending US presidential elections may contribute significantly to Bitcoin’s price evolution. Maire believes that the elections will overall positively impact the crypto market. The authorities would want to avert any crash in traditional markets, which usually benefits the crypto market, especially with the recent deeper interconnection between the two due to the introduction of ETFs. Despite the market's high volatility, the current outlook remains largely positive.
Sergei Gorev, a risk manager at fintech platform YouHodler, highlighted the crucial role of inflows from U.S. spot Bitcoin exchange-traded funds (ETFs) in propelling Bitcoin to its new highs. He indicated that Spot Bitcoin ETFs purchase nearly ten times more Bitcoin daily than what miners produce. As of March 13, Spot Bitcoin ETFs had reached a total on-chain holding of $60.5 billion. If the inflow from the past two weeks continues at the same pace, Bitcoin ETFs are estimated to consume around 8.82% of the BTC supply annually, as per data from Dune.
Published At
3/14/2024 1:49:34 PM
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