An analysis from asset manager Grayscale suggests that fundamental changes to Bitcoin’s demand-supply equation, coupled with the introduction of exchange-traded funds (ETFs), are likely to have a significant impact on cryptocurrency prices following the upcoming halving event.
Historically, periods of price appreciation have followed halving events, which occur approximately every four years. However, Grayscale’s analysis indicates that the introduction of Bitcoin ETFs could introduce a new factor influencing Bitcoin’s performance post-halving.
Grayscale highlights Bitcoin’s current mining rate of 6.25 Bitcoin per block, amounting to approximately $14 billion annually based on a price of $43,000. This implies that $14 billion worth of buy pressure is required to maintain current prices over the same period.
During halving events, the reward for mining a block is halved, leading to a reduction in mining revenue for miners. Despite this, mining costs typically remain constant or may even increase to ensure profitability. In response to cost pressures, miners tend to sell more of their Bitcoin inventory, increasing supply and potentially depressing prices.
Grayscale suggests that the recent introduction of nine Bitcoin ETFs on Wall Street could offset the selling pressure from miners. These ETFs could absorb sell pressure, providing a steady demand source and potentially reshaping Bitcoin’s market structure in a positive manner.
The newly launched Bitcoin ETFs have seen positive demand, reaching a milestone of $10 billion in assets under management (AUM) within their first 20 trading sessions. Notably, BlackRock’s iShares Bitcoin Trust leads with BTC holdings worth $4 billion, according to data from BitMEX Research.
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