Bitcoin’s 2024 Halving: Bullish or Bearish?
Crypto analyst Nicholas Merten uniquely views the upcoming Bitcoin (BTC) halving. He believes that it might not lead to the expected revival of the bull market, in contrast to the consensus among many traders and analysts.
Bitcoin halvings occur every four years, reducing BTC mining rewards by half and decreasing the new supply influx into the market. The next halving is scheduled for April 15th.
Merten explains that the halving technically cuts the inflation rate in half, but the real-world impact of this reduction is diminishing over time. He also notes that this diminishing impact on new supply helps explain why Bitcoin’s returns have dwindled over time, as its growth rate isn’t as rapid as it was in the past.
Regarding the specifics of the next halving, Merten points out that it will reduce miner rewards from around 6.25 Bitcoin per block to 3.125 Bitcoin per block. He is skeptical about the potential for this reduction to spark a significant rally, as he considers it relatively small when compared to Bitcoin’s total market capitalization.
To put it in perspective, Merten clarifies that this means 164,250 fewer Bitcoins will be generated annually, equivalent to roughly $4.4 billion at current Bitcoin market rates.
Miners could sell these Bitcoins to cover their operational expenses, including electricity and hardware costs. On a daily basis, this translates to 450 fewer Bitcoins per day, which is approximately $12 million less in potential selling pressure at current market rates.
However, when comparing these figures to the overall valuation and size of the Bitcoin market, the outlook becomes less optimistic. Bitcoin’s market capitalization currently stands at $523 billion, nearly half a trillion dollars, making the $4.4 billion figure appear as only a minuscule fraction of Bitcoin’s total value.