Bitcoin halving’s price influence ‘diminished,’ demand now key driver: CryptoQuant

According to a recent study by cryptocurrency analysis firm CryptoQuant, the impact of Bitcoin’s (BTC) halving on its market price may not be as dramatic as some investors expect.

“According to CryptoQuant’s analysis in their April 9 research report, which was reviewed by CryptoMoon, the impact of Bitcoin’s halving is becoming less significant due to the decreasing new issuance compared to the increasing selling from long-term holders.”

After the Bitcoin halving, the significant surge in purchasing interest from substantial Bitcoin owners is expected to primarily influence its market value.

The call for Bitcoins from whales with a stash between 1,000 and 10,000 coins has reportedly reached “near record levels” according to CryptoQuant, marking an approximately 11% increase month over month.

Bitcoin halving’s price influence ‘diminished,’ demand now key driver: CryptoQuant

During certain periods from 2021 to 2023, the decrease in Bitcoin supply due to halving events didn’t lead to a price increase as usual because the demand from long-term investors was stronger than the newly available Bitcoin.

In simpler terms, the difference between the two (the gap) is currently bigger than it has ever been before. This means that the impact of Bitcoin’s periodic supply reduction (halving) on its market price could be less significant than what we have seen historically, given the consistent monthly shortage in supply.

In simpler terms, seven times more Bitcoin is being bought and held by existing investors each month compared to the amount of new Bitcoin being released into the market.

“Permanent holders are adding as much as 200K Bitcoin per month to their balances, much more than the ~28K Bitcoin issuance. Bitcoin monthly issuance will decrease to ~14K after the halving,” it stated.

In addition, the amount of new Bitcoins released each day dropped to just 4%, which is a much smaller percentage of the overall supply in comparison to before past Bitcoin halvings.

“In the past, before the first, second, and third Bitcoin halvings, approximately 69%, 27%, and 10% of the total Bitcoin supply were released,” according to CryptoQuant’s analysis.

Bitcoin halving’s price influence ‘diminished,’ demand now key driver: CryptoQuant

Following the 2016 Bitcoin halving, its price soared approximately 4,200% to reach $19,800. After undergoing another halving in 2020, Bitcoin‘s price experienced a nearly 683% growth, rising to around $69,000.

An upcoming change in the Bitcoin system is called a halving, where miners’ rewards and the new Bitcoin created are decreased by half. Specifically, the number of Bitcoins received as a reward for mining a block will drop from 6.25 to 3.125 coins.

Currently, according to CoinMarketCap’s latest information, Bitcoin costs around $68,764 – a 7.12% price hike in just the last five days.

Related: Bitcoin’s halving won’t see a 600% return this year — so adjust your strategy

Despite some signs to the contrary, other factors indicate that investors are hopeful that the upcoming Bitcoin halving in late April will lead to an increase in Bitcoin’s value.

The current Open Interest for Bitcoin is at around $78.36 billion according to CoinGlass, with only eleven days remaining until the upcoming halving event. This figure is approximately thirty times larger than the Open Interest recorded exactly eleven days prior to the last halving in May 2020, which amounted to a relatively modest $2.61 billion.

The overall value of all bitcoin futures contracts that have yet to be settled across various exchanges is represented by OI. An increase in this value signifies elevated market activity and optimism among traders.

Rekt Capital, who goes by a pseudonym and has over 447,000 followers on platform X, believes that any decrease in Bitcoin’s price prior to the upcoming halving will most likely rebound swiftly.

“Have you considered that any disadvantages Bitcoin may face prior to its halving in 2024 could represent the last affordable buying chance during that timeframe according to Rekt’s April 9 post on X?”

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2024-04-10 05:56