- Bitcoin’s price continued to fall in the hour immediately following the pivotal event.
- The gap between Bitcoin’s supply and demand is expected to widen further
After much anticipation, Bitcoin finally completed its 4th halving in the early hours of 20 April GMT. Owing to the halving, mining rewards have now fallen to 3.12 BTC from 6.25 BTC. The once-in-4-years event, Bitcoin [BTC] underwent its halving when the 840,000th block was added to Bitcoin’s blockchain.
As expected, much volatility has been the norm on Bitcoin’s price charts over the past few weeks in light of the halving. At the time of writing, BTC was valued at $63,370, having fallen by almost 2% in the last 6 hours alone. Indicators pointed to bearish inclinations as the Moving Average was positioned well above the price candles. On the other hand, the CMF was well above zero – A sign of positive capital inflows.
Source: BTC/USD, TradingView
Bitcoin becomes scarcer
Bitcoin was envisaged as a deflationary currency. Simply put, its supply would diminish gradually with each halving until it reaches the hard cap of 21 million. Such a supply squeeze when matched with growing demand could bolster its prospects as a store of value asset, akin to how Gold is seen in the mainstream.
Will the king coin rally?
Market participants view halving as a bullish event as the king coin has historically increased in value thereafter.
Indeed, the halving in July 2016 was followed by a 3x rise in BTC’s value over the next 12 months. Similarly, the last halving in May 2o20 saw the king coin explode by 500% in the following year, as per AMBCrypto’s analysis.
Source: CoinMarketCap
A lot depends on ETF demand
The latest halving holds significance because it comes amidst what still appears to be a bull market phase.
The demand for Bitcoins has skyrocketed following the listing of spot exchange-traded funds (ETFs) in the U.S earlier in the year. The new investment avenues have attracted a Cumulative Total Net Inflow of over $12.23 billion since their listing. This means that on average, nearly $120 million in Bitcoin flows into these funds daily.
Is your portfolio green? Check out the BTC Profit Calculator
On the other hand, the number of new Bitcoins getting mined daily stood at an average of $50 million, AMBCrypto found using Glassnode’s data.
Hence, the demand exceeded supply by a factor of more than 2x, at the time of writing. With supply set to dip further, the gulf can be expected to widen further, causing Bitcoin to rally.
Source: Glassnode
Powered by WPeMatico
