Bitcoin Halving Impact May Be Diminished, Large-Scale Holders to Drive Price: CryptoQuant Report
Summary:
Crypto analytics firm CryptoQuant predicts that the upcoming Bitcoin halving may not significantly impact Bitcoin's price as some investors anticipate. The report suggests that, instead, the increased demand from large-scale holders, or "whales," will drive Bitcoin's post-halving price. The firm also points out that current supply-demand imbalance is the largest ever, indicating that the halving effect might be less potent than before. The report concludes that investor optimism remains high in the lead-up to the halving event scheduled for April 20th.
The upcoming Bitcoin halving might not have as significant an impact on Bitcoin's (BTC) value as investors predict, according to a recent research report by crypto analytics company, CryptoQuant. The report, released on April 9th, argues the effect of halving may be lessened as new Bitcoin emissions become less substantial compared to Bitcoin sales from long-term stakeholders.
Instead, a significant factor influencing Bitcoin's post-halving price will likely be an enhanced demand from investors who hold large quantities of Bitcoin. CryptoQuant reported that demand from so-called Bitcoin “whales” who own between 1,000 and 10,000 Bitcoin has near peaked, showing 11% growth month-on-month. Simultaneously, the quantity of wallet addresses holding 1K-10K Bitcoin is significantly ramping up.
While Bitcoin’s halving decreases supply—typically causing a price surge—throughout 2021 and 2023, there have been several instances where monthly demand from long-standing holders has outpaced supply within the same period. The current supply-demand imbalance is larger than ever before, indicating that the impact of halving on Bitcoin prices might not be as intense as previous times. Long-term owners are now acquiring roughly seven times more Bitcoin monthly compared to circulating new Bitcoin.
Additionally, the total yield of Bitcoin plummeted to a mere 4% of the available supply, a significantly smaller proportion compared to pre-halving periods.
After the 2016 halving, Bitcoin's price soared roughly 4,200% to $19,800, and after the 2020 event, the price rose by nearly 683% to $69,000. The Bitcoin halving is a process where miner rewards and its inflation rate are cut by half. The forthcoming halving will see block rewards decreased from 6.25 Bitcoin to 3.125 Bitcoin. As of press time, Bitcoin is priced at $68,764, reflecting a 7.12% gain over the past five days.
However, some signs remain pointing to investor optimism regarding the imminent Bitcoin halving—scheduled for April 20—as a major boost to Bitcoin's climbing value. Current Bitcoin Open Interest (OI)—the total value of unsettled Bitcoin futures contracts across exchanges—is at $78.36 billion, a massive increase from the $2.61 billion reported 11 days before the 2020 halving.
Rekt Capital, whose anonymous identity has garnered 447,000 followers on X, suggested any Bitcoin price drop between now and the halving would likely not last long. "Any downside experienced by Bitcoin before the halving will likely be the last bargain-buying opportunity for the 2024 pre-halving period," they predicted in an April 9 post.
Published At
4/10/2024 5:49:07 AM
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