Bitcoin‘s leading cryptocurrency, Bitcoin ($BTC), might experience a substantial price increase in the near future due to the decreasing supply on centralized crypto platforms. Furthermore, following the forthcoming halving, Bitcoin will be more scarce than gold.
Based on a report from Bybit, a well-known cryptocurrency trading platform, the approaching Bitcoin halving could trigger a short squeeze since there are merely nine months remaining until all available Bitcoin on centralized exchanges will have been mined.
The report indicates that approximately 2 million Bitcoins remain on cryptocurrency exchanges. With an estimated $500 million in daily inflows from Bitcoin spot ETFs, about 7,142 Bitcoins will be transferred off exchanges each day.
Considering this, it’s not surprising that Bitcoin’s price might keep rising before and even after the halving event, given the expected supply compression driving the cost to yet another peak.
According to Bybit’s analysis, the Bitcoin supply grows increasingly limited following each halving event. In contrast to commodities like gold, the scarcity of Bitcoin actually decreases due to fewer new tokens being created. Using the stock-to-flow (S2F) framework, BTC is predicted to have a value equivalent to double that of gold. The S2F model considers the existing Bitcoin reserves as the “stock” and the annual production as the “flow.”
The Bitcoin halving means that miners will now earn only half the amount of new Bitcoins for each block they mine. Specifically, the reward will decrease from 6.25 Bitcoins to 3.125 Bitcoins, resulting in a reduction by fifty percent in the number of freshly minted Bitcoins being released into circulation.
According to Bybit’s latest data, the stock-to-flow ratio for Bitcoin is approximately 56 at the moment. In contrast, gold currently has a ratio of 60. Following the anticipated halving event, scheduled for later this month, Bitcoin’s stock-to-flow ratio is projected to increase significantly to around 112.
According to a report by CryptoGlobe, Julio Moreno, the Head of Research at cryptocurrency analytics firm CryptoQuant, stated that the desire for Bitcoin (BTC) among long-term investors, or permanent holders, has surpassed its production for the first time. In simpler terms, the need for Bitcoin from these investors is currently more significant than the amount being produced.
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2024-04-18 01:57