- Bitcoin’s price continued to fall in the hour immediately following the pivotal event.
- The gap between Bitcoin supply and demand is expected to widen further
After a long wait, Bitcoin finally completed its fourth halving in the early hours of April 20 GMT. As a result of the halving, mining rewards have now dropped from 6.25 BTC to 3.12 BTC. The event that happens once every four years, Bitcoin [BTC] underwent its halving when the 840,000th block was mined and added to Bitcoin’s blockchain.
As expected, a lot of volatility has been the norm on Bitcoin price charts in recent weeks in light of the halving. At the time of writing, BTC was valued at $63,370, having fallen nearly 2% in the past six hours alone. Indicators pointed to bearish tendencies as the moving average was 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 is becoming scarcer
Bitcoin was seen as a deflationary currency. Simply put, the supply would gradually decrease with each halving until it reaches the hard limit of 21 million. Such a supply contraction, combined with growing demand, could boost its prospects as a store of value, similar to how gold is viewed in the mainstream.
Will the king’s coin gather?
Market participants view halving as a bullish event as the king coin has historically risen in value afterward.
The July 2016 halving was followed by a threefold increase in the value of BTC over the next twelve months. Similarly, the last halving in May 2020 saw the king coin explode by 500% the following year, according to AMBCrypto’s analysis.
Source: CoinMarketCap
A lot depends on the demand for ETFs
The latest halving is important because it takes place during what still appears to be a bull market phase.
Demand for Bitcoins has soared following the listing of spot exchange-traded funds (ETFs) in the US earlier this year. The new investment opportunities have a Cumulative total net inflow of more than $12.23 billion since their listing. This means that an average of almost $120 million worth of Bitcoin flows into these funds every day.
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On the other hand, the number of new Bitcoins mined daily averaged $50 million, AMBCrypto found based on Glassnode’s data.
At the time of writing, demand exceeded supply by a factor of more than twice. With supply set to drop further, the gap can be expected to widen further, causing Bitcoin to recover.
Source: Glassnode
