In the world of cryptocurrencies, few events stir as much emotion and speculation as the approaching Bitcoin halving. This pivotal moment, expected in 2024, is associated with expectations of another increase in the value of the largest digital asset. But what exactly does halving mean for Bitcoin and how does it affect investor behavior? Let’s examine how the supply of BTC changes, what strategies investors adopt, and what consequences this may have for the entire cryptocurrency market.
Bitcoin halving is an event that occurs every four years and is associated with halving the reward for mining a new block in the Bitcoin network. It is a mechanism built into Bitcoin’s source code, designed to limit inflation by reducing the pace at which new coins are introduced into circulation. The next halving is expected in 2024 and is already attracting investor interest.
According to analytical data, over the past quarters, the amount of Bitcoin held in long-term holders’ wallets has significantly increased. At the same time, the actively traded supply of Bitcoin on exchanges has dropped to just 5-10% of the total supply in circulation. This indicates a ‘HODL’ strategy – holding the currency in anticipation of an increase in its value – adopted by many investors.
This phenomenon is closely linked to the growing interest in institutional deposit products, such as the Grayscale Bitcoin Trust (GBTC). It is worth noting that the rise in interest in GBTC coincided with a turning point in March 2020, when there was a significant increase in demand for this product.
It is also interesting how the growing illiquid supply of Bitcoin fits into the context of the upcoming halving. Currently, about 81,000 BTC is mined each quarter, and this number is expected to fall to about 40,000 after the halving. At the same time, the illiquid supply of Bitcoin has increased almost 2.2 times relative to the mining rate. In the past, similar periods of accumulation preceded halving, which may indicate a strategy of investors preparing for a potential increase in Bitcoin’s value.
In addition, the market experienced a correction in the last 24 hours, where the value of Bitcoin fell below $37,000. However, despite this correction, the overall market sentiment remains optimistic. Increased interest in ETFs and analysts’ forecasts indicate the possibility of new liquidity inflows in the coming months, for both Bitcoin and Ethereum.
The approaching Bitcoin halving has a significant impact on the cryptocurrency market. Changes in supply, investor strategies, and overall optimism may herald another growth cycle for Bitcoin, similar to that of 2021. It is worth following these changes to better understand how dynamic and fascinating the digital currency market can be.
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