According to a research report from CryptoQuant, the upcoming Bitcoin halving event will not have as significant of an impact on the price of Bitcoin as many investors expect. The report argues that the effect of the halving has been diminishing, as the new issuance of Bitcoin is becoming smaller relative to the amount being sold by long-term holders. Instead, the key driver of Bitcoin’s price following the halving will be the increase in demand from investors with substantial holdings of Bitcoin.
CryptoQuant notes that demand from whales holding between 1,000 and 10,000 Bitcoin has reached a record high, with 11% month-on-month growth. This increase in demand from large holders suggests that the halving’s effect on Bitcoin’s price may be less powerful than in previous halvings.
The report also highlights that long-term holders are accumulating about seven times more Bitcoin per month than the new Bitcoin entering circulation. This means that there is an ongoing monthly supply deficit, further reducing the potential impact of the halving on Bitcoin’s price.
Additionally, the total issuance of Bitcoin has decreased significantly compared to previous halvings. Before the first, second, and third halvings, issuance represented 69%, 27%, and 10% of the total available supply, respectively. However, the current issuance represents only 4% of the total available supply, indicating a much smaller proportion.
Despite these findings, there are still indicators that suggest investors remain optimistic about the upcoming halving. Open Interest (OI) in Bitcoin futures contracts is currently at $78.36 billion, which is approximately 30 times higher than the OI volume recorded 11 days before the previous halving in May 2020. This suggests increased market activity and trader sentiment.
In conclusion, while the Bitcoin halving event is expected to reduce supply and potentially increase the price of Bitcoin, the research report suggests that the impact may not be as significant as in previous halvings. The increase in demand from large holders and the ongoing monthly supply deficit are factors that could mitigate the halving’s effect on Bitcoin’s price. Nonetheless, there are still indicators of optimism in the market leading up to the halving.