Bitcoin’s upcoming halving event, scheduled for block 840,000 on April 20, is expected to have a more favorable supply-demand dynamic than previous halvings. This is primarily due to the recent launch of spot Bitcoin exchange-traded funds (ETFs) in the United States. During a halving, Bitcoin miner rewards are halved every cycle, occurring approximately every 48 months or 210,000 blocks. The upcoming halving will reduce mining rewards from 6.25 BTC ($418,800) to 3.125 BTC ($209,400).
Historically, Bitcoin’s price has increased and broken previous all-time highs about four to five months after a halving. This was evident in the last halving on May 11, 2020, when Bitcoin was priced at $8,750. It surged by 430% to $61,300 by mid-March 2021, surpassing the previous all-time high of $19,665 on Dec. 16, 2017.
Analysts largely attribute this price increase to the introduction of spot Bitcoin ETFs, which have significantly impacted Bitcoin’s supply-demand dynamics. Jaran Mellerud, founder and chief strategist at Hashlab Mining, stated that spot Bitcoin ETF issuers are acquiring 2,450 BTC daily, while only 900 BTC are being mined. This increase in demand, coupled with the halving’s reduction in supply, is expected to drive Bitcoin’s price substantially higher.
Furthermore, the health and security of the Bitcoin network have also improved. Mellerud highlighted that Bitcoin’s hashrate is now five times higher than it was during the last halving, making the network more secure and virtually impenetrable. The network’s security has also been enhanced by the geographic decentralization of miners. Chinese miners, who previously controlled a significant portion of the network, are now being joined by miners from Africa and Latin America, attracted by cheaper electricity prices.
Overall, the upcoming halving is anticipated to have a positive impact on Bitcoin’s price, driven by the introduction of spot Bitcoin ETFs and the increased security and decentralization of the network.