Observers await the fourth BTC halving, anticipating it as the catalyst for the next bullish event to boost Bitcoin price.
As the fourth Bitcoin halving approaches, heightened demand, and BTC spot ETF influence may draw unprecedented attention.
The Bitcoin halving event systematically reduces miner rewards every 210,000 blocks, occurring approximately every four years.
68 days until the #Bitcoin halving is complete. I think we can smash thru $100k.
— Conor Kenny (@conorfkenny) February 5, 2024
This process aligns with Bitcoin’s deflationary approach to reaching its final circulating supply limit. At Bitcoin’s 2009 launch, miners initially received 50 Bitcoin per block.
Subsequent halvings have slashed mineres’ rewards to 25, 12.5, and 6.25 BTC, respectively. The next halving is scheduled to occur in Q2 this year, further slashing rewards to 3.125 BTC per successful block.
Historically, each halving correlates with a notable appreciation in Bitcoin prices, mitigating the impact on miner revenues. This year, the influence of BTC spot ETFs has fueled unprecedented attention and demand. According to the CoinShares report, BTC spot ETFs have averaged $1.9 billion over the last four weeks. This brings the total inflow since its launch to an impressive $7.7 billion.
However, it could be argued that the launch of these products has yet to pump BTC prices. Bitcoin was priced at $45K prior to the approval of BTC spot ETF. The asset trades at $43.8K per token, a loss of over 1.50% since launch. Analysts argue that despite BTC spot ETFs not meeting price expectations, their funding performance has surpassed predictions. Specifically, Bitcoin ETFs contribute to approximately 20% of the daily trading volume in Bitcoin.
Meanwhile, observers await the fourth BTC halving, anticipating it as the catalyst for the next bullish event to boost Bitcoin price.
BTC Halving and Impact on Mining Hashrates
The Bitcoin mining network has grown remarkably, witnessing a 104% increase in hashrate in 2023. Examining patterns since the 2012 Bitcoin halving, CoinShares’ January 2024 report reveals a consistent trend of hashrate drop. Historically, hashrates dip around 9% below the established trend line during post-halving for approximately six months. The year 2020 deviated from this norm due to China’s mining ban, resulting in an extended 42% drop below the trend line. Despite the extended drop, the typical cycle involved a mid-cycle recovery and a surge roughly a year before the next halving.
This cycle is rooted in miners’ strategic responses to halving events. To remain competitive, miners boost capital expenditure before halving, pushing hashrate well above the trend.
Interestingly, hashrate growth often peaks about four months pre-halving, attributed to a “Bitcoin rush” causing a spike in mining difficulty. The mining difficulty is at historic highs, mirroring relative peaks from previous cycles. Considering historical trends, CoinShares projects hashrate to normalize around 450EH/s by April 2024 halving and decreasing to 410EH/s six months later.
Subsequently, the trend line projects a sharp increase to approximately 550EH/s by 2024.
Miners with conviction and understanding are not worried about the block reward halving to 3.125 BTC in a couple of months.
They are fomoing to get as much hashrate online as possible to get those sweet 3.125 BTC rewards before they halve to 1.56 in four years and 0.78 four…
— hodlonaut 80 IQ 13%er 🌮⚡🔑 🐝 (@hodlonaut) February 4, 2024
CoinShares insight into the future of Bitcoin’s hashrate provides valuable perspectives for industry stakeholders and observers alike.