As history shows, halving events have aligned with times when demand significantly exceeded the reduced supply, driving prices upward.
The upcoming Bitcoin halving 2024, scheduled for late April 20th, is a highly anticipated event expected to drive Bitcoin price to a new all-time high record. However, Fred Thiel, Marathon Digital Holdings’ CEO, the largest Bitcoin miner in the US, believes a portion of this rally might already be priced in.
The remarkable surge of Bitcoin’s value, soaring over 60% in 2024, has been driven by the successful US launch of Bitcoin exchange-traded funds (ETFs). Thiel suggests that this newfound investment accessibility has “brought forward” the price appreciation typically observed three to six months after Bitcoin’s halving event.
“I think the ETF approval, which has been a huge success, has attracted capital into the market and essentially brought forward what could have been the price appreciation we typically would have seen three to six months post halving,” he said.
Bitcoin Halving Impact Offset by Whales’ Activity
The upcoming Bitcoin halving will cut miners’ block rewards by 50% – the amount of Bitcoin earned for validating transactions. However, reducing a crucial revenue source for mining firms like Marathon, this halving also breaks new Bitcoin supply entering circulation. Historically, this decrease in supply, coupled with constant demand, has led to price increases.
However, CryptoQuant, a reputable cryptocurrency analytics firm, offers a different perspective. Their latest report suggests the halving’s influence on price may be less dramatic than anticipated. This is because the decreasing supply of newly minted Bitcoin is being overshadowed by increased selling from long-term holders.
$BTC demand growth seems to be a major driver of higher prices post-halving.
— CryptoQuant.com (@cryptoquant_com) April 9, 2024
In past cycles, #Bitcoin demand growth from large holders/whales (violet area) has spiked, fueling the price rally.
Currently, demand growth is around the highest ever (11% MoM). pic.twitter.com/PefL54jPlC
CryptoQuant highlights a crucial shift in market dynamics. They contend the primary drive for Bitcoin’s price trajectory post-halving will likely stem from increasing demand among “whales” – investors holdings substantial Bitcoin reserves, particularly those holding between 1,000 and 10,000 Bitcoins, potentially contributing to a positive price trend.
Long-Term Holders Outpace Bitcoin’s New Supply
As history shows, halving events have aligned with times when demand significantly exceeded the reduced supply, driving prices upward. Contrarily, from 2021 to 2023, long-term holder demand already surpassed the inflow of new supply. This trend persisted in 2024, with long-term holders accumulating a remarkable 7x more Bitcoin monthly than the newly issued amount.
With the launch of Bitcoin ETFs and increased demand from whales, coupled with a pre-existing supply-demand imbalance, the upcoming halving might not trigger a price surge as significant as those witnessed in the past. While a price increase is still a possibility, the market may have already factored in a portion of the anticipated rally.
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