Bitcoin’s upcoming halving event, expected on April 20, 2024, is anticipated to create a more favorable supply-demand dynamic than previous halvings, fueled by the recent introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States.
Bitcoin’s halving mechanism, occurring approximately every 48 months or every 210,000 blocks, halves miner rewards. The upcoming halving, expected at block 840,000, will reduce rewards from 6.25 BTC to 3.125 BTC.
Historically, Bitcoin’s price tends to rise significantly after halving events. For instance, following the 2020 halving, Bitcoin surged 430% within five months, surpassing previous all-time highs.
Spot Bitcoin ETFs have revolutionized Bitcoin’s supply-demand dynamics. These ETF issuers are acquiring 2,450 BTC daily, exceeding the daily mining output of 900 BTC. This surge in demand, coupled with reduced supply from halving, is expected to propel Bitcoin’s price substantially higher.
Bitcoin’s network has significantly strengthened, with its hash rate now five times higher than at the previous halving. This increased hash rate renders the network more secure and resistant to attacks.
Bitcoin’s hash rate is now more widely distributed geographically, compared to the concentration observed during the last halving. The migration of miners to regions like Africa and Latin America, attracted by cheaper electricity prices, contributes to this decentralization trend.
The combination of reduced supply from halving, increased demand from spot Bitcoin ETFs, and enhanced network security positions Bitcoin for substantial price appreciation post-halving. The ongoing geographic decentralization of mining further strengthens Bitcoin’s resilience and decentralization.
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