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Bitcoin’s Post-Halving Demand to Be 5x Greater Than Supply, Bitfinex Estimates

Apr 22, 2024
    Analysts at Bitfinex estimate that the new BTC supply added to the market could drop to $30 million per day, amounting to less than five times the average daily inflows into the spot-based ETFs.Investor are increasingly taking direct custody of their coins, Bitfinex added.
The mining reward reduction for Bitcoin (BTC) lately may significantly increase the desire for cryptocurrency among investors up to five times more than its current available amount, predicts Bitfinex’s crypto analysis team.
On Saturdays, miners saw their reward per block slashed in half to 3.125 BTC from the previous 6.25 BTC. According to Bitfinex, this reduction could lead to a decrease in the value of the new coins entering the market daily, potentially dropping to around $30 million. This is a substantial decline, which is approximately five times less than the average demand for Bitcoin from U.S. spot Exchange-Traded Funds (ETFs).
Based on the decreasing daily issuance rate following the Bitcoin halving, our estimation suggests that around $40-$50 million in new BTC will enter the market each day, equivalent to USD-notional terms. However, this figure may decrease to approximately $30 million per day as both active and dormant supplies come into play, along with miner sales. This expectation is reinforced by the potential shutdown of smaller mining operations.

Analysts noted that the daily average inflows into Bitcoin spot ETFs exceed $150 million, which is much higher than previous numbers, despite a recent decrease and even negative flows.

The reduction in new Bitcoin supply is underway. According to Glassnode’s data, the daily addition of new coins to the circulating supply has decreased from approximately 900 BTC or $54 million before the halving, to just 450 BTC, which is around $28 million now.
Bitcoin's Post-Halving Demand to Be 5x Greater Than Supply, Bitfinex Estimates

Around a dozen ETFs focused on specific cryptocurrencies started trading in the US on January 11, giving investors an opportunity to gain exposure to crypto without actually owning it. Bitfinex assumes that the average daily inflows into these ETFs since their launch will continue at the same rate in the upcoming months.

Miner selling might decrease, as miners had depleted a significant portion of their Bitcoin stockpiles in the six months prior to the halving. This was done to finance upgrades for their mining equipment, aiming for continued profitability after the halving event. According to Glassnode’s data, approximately 18,000 BTC less were held in miner wallets compared to half a year ago, leaving around 1.82 million BTC remaining.

In conclusion, as reported by Bitfinex, there is a rising trend among investors to hold their cryptocurrencies directly instead of keeping them in exchanges. This action reduces the amount of coins available in the market, making the supply side weaker.

According to recent on-chain figures, Bitcoin exchanges have experienced significant outflows akin to those observed in early 2023, implying that numerous investors are transferring their coins to offline wallets in preparation for potential price surges. (Analysts at Bitfinex)

In the meantime, long-term investors have been actively selling their Bitcoin holdings without causing the usual price decrease before the halving event. This is a sign that new investors are effectively absorbing this selling pressure.

At the moment of reporting, Bitcoin was traded at $66,660 with an increase of more than 5% since its last halving. Contrary to predictions of a price decrease, this cryptocurrency continued to thrive. The CoinDesk 20 Index, which represents the broader market, experienced a rise of almost 7%, according to CoinDesk’s records.

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2024-04-23 10:45