Spot Bitcoin ETFs and Next Halving Predicted to Drive Historic Bitcoin Price Increase
Summary:
The recent launch of spot Bitcoin ETFs in the U.S. will enhance Bitcoin's supply-demand dynamics ahead of the next halving, slated for April 20, 2022. The halving, which takes place roughly every four years, will reduce Bitcoin mining rewards from 6.25 BTC to 3.125 BTC. Historically, Bitcoin's price tends to rise four to five months after each halving. The introduction of spot Bitcoin ETFs, which are acquiring a higher rate of BTC than is being mined, is predicted to significantly boost Bitcoin's price. Additionally, Bitcoin's network is now more secure and decentralized due to an increased hashrate and geographic distribution of miners.
The recent introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States enhances Bitcoin's supply-demand dynamics, giving it more boost than the previous halvings in 2012, 2016 and 2020. The halvings, which happen about every four years or specifically every 210,000 blocks, reduce Bitcoin mining rewards by half. The next one is due at block 840,000, slated for April 20, which would bring down mining prizes from 6.25 BTC ($418,800) to 3.125 BTC ($209,400).
Historical data suggests the price of Bitcoin starts to climb, often surpassing its previous record highs, roughly four to five months post-halving. This pattern was observed after the last halving on May 11, 2020, where Bitcoin began at $8,750 and rose to $61,300 by mid-March 2021, a 430% increase achieved in just five months, and bust the earlier peak of $19,665 from Dec. 16, 2017.
This increase is predominantly attributed to the influence of spot Bitcoin ETFs, which had significantly altered Bitcoin's supply-demand dynamics, as highlighted by Jaran Mellerud, a leading strategist at Hashlab Mining. Spot Bitcoin ETFs are currently accruing 2,450 BTC daily, a figure considerably higher than the 900 mined every day, according to Mellerud.
Following the next halving in late April, only 450 BTC will be produced per day, a supply swept up by ETFs at a rate five time larger. Mellerud predicts this supply-demand disparity will send Bitcoin prices on a volatile but steady uptrend.
Bitcoin's demand is projected to rise as a consequence of the halving and the ETFs, simultaneously as the coin's supply drops. This interplay, according to Matt Hougan, ought to result in a "substantially higher" Bitcoin price.
Moreover, Bitcoin's network health has improved significantly, notes Mellerud, with its hashrate now five times what it was during the last halving. It would now require five times the computing power, electricity, and mining equipment to pose a credible threat to the network, which is practically impossible.
Mellerud also stated that Bitcoin's hashrate is geographically more dispersed now than during the previous halving. As miners move to Africa and Latin America to take advantage of lower electricity costs, Bitcoin increasingly becomes a more decentralized entity.
Published At
3/11/2024 10:14:46 AM
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