Based on CryptoQuant’s latest findings, the effect of Bitcoin‘s halving on its price might not be as substantial as some investors anticipate.
The decrease in Bitcoin‘s halving impact can be explained by the declining difference between the rate at which new Bitcoins are created and the pace at which long-term holders are selling them.
The increase in demand for Bitcoin ($BTC) following the halving appears to be a significant reason for its rising prices. Historically, the surge in demand from large investors and whales (represented by the violet area) has ignited price growth during past Bitcoin cycles. At present, the demand expansion is among the highest recorded (an 11% monthly increase).— CryptoQuant.com (@cryptoquant_com) April 9, 2024
After the Bitcoin halving, it’s expected that the primary factor shaping its price will be the rising demand from large-scale Bitcoin holders, specifically those possessing 1,000 to 10,000 Bitcoins. This growing interest from whales has been gradually intensifying, possibly leading to a favorable price trend for Bitcoin.
Previously, Bitcoin’s price typically rose following supply decreases due to halving events because the desire for the cryptocurrency exceeded the reduced amount available. However, during the period between 2021 and 2023, there were instances when the demand from long-term investors surpassed the fresh supply entering the market.
The difference between what people want to buy and what’s available for sale has grown larger, indicating that the upcoming price reduction may have less effect on market costs than previously.
In simpler terms, more Bitcoin is being bought and held for long periods by existing investors compared to the new Bitcoin entering circulation every month.
According to CryptoQuant, permanent holders are currently increasing their Bitcoin holdings by approximately 200,000 Bitcoins every month. This is significantly higher than the monthly supply addition of around 28,000 Bitcoins through mining. After the upcoming halving event, the new monthly issuance rate is projected to decrease to about 14,000 Bitcoons.
The amount of new Bitcoins being released with each block mined has reduced significantly, now accounting for just 4% of the overall supply. In contrast, before the first, second, and third halvings, approximately 69%, 27%, and 10% of the total supply were generated through mining respectively.
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2024-04-10 10:13