According to a recent report from Bybit Exchange, the impending halving of Bitcoin in April 2024 could make the largest cryptocurrency twice as rare as gold.
One of the top three cryptocurrency exchanges in the world based on volume, there are only nine months of supply remaining on exchanges for Bitcoin given the current dynamics, the report stated further.
The stock-to-flow (S2F) ratio is a measure of scarcity that is derived from dividing the circulating supply of a commodity by its yearly production.
“Bitcoin’s S2F ratio is around 56 before the upcoming halving, while gold is 60. After halving in April 2024, Bitcoin’s S2F ratio is projected to double to 112,” the report said, as reported by the Zawya.
The supply of Bitcoin is anticipated to tighten following the halving.
“Bitcoin reserves in all centralised exchanges have been depleting faster. With only 2 million bitcoins left, if we assume a daily inflow of USD 500 million to Bitcoin Spot ETFs, the equivalent of around 7,142 bitcoins will leave exchange reserves daily, suggesting that it will only take nine months to consume all of the remaining reserves,” the report said.
“The Bitcoin halving has been the subject of the most talk among cryptocurrency enthusiasts. For investors, miners, and the industry as a whole, this could be a pivotal moment that changes everything,” it mentioned further.
According to a report from Seeking Alpha, the fourth Bitcoin halving, which is scheduled for April 20, 2024, will lower mining rewards to three point 125 BTC, further solidifying the cryptocurrency’s deflationary characteristics by limiting production.
Inflows into the cryptocurrency have surpassed USD 12.1 billion since the United States Security and Exchange Commission’s (SEC) historic approval of the first Bitcoin ETFs in January 2024. Amidst all of this confusion, the impending halving of Bitcoin is a crucial event that has the potential to significantly change the rules of play.
The halving is anticipated to drastically reduce rewards for miners, driving up the price of producing Bitcoin. Seeking Alpha claims that it’s a game-changer for mining behemoths like MARA and RIOT.
As the supply of Bitcoin gets closer to the 21 million cap and the deflationary asset gains more traction, halvings have historically indicated a bullish turn for the cryptocurrency.
Since its 2009 inception, Bitcoin has undergone three halving events, each followed by notable price increases. Following the 2012 halving, BTC climbed by 9,500%, and the 2016 halving saw a 3,000% increase in the following year.
“The price increase after the 2020 halving was more modest, reaching only 650%. Unlike previous events, BTC has already increased by 110% before this upcoming halving. This has led some to consider the current situation as distinct from previous ones. Voices are suggesting that the halving might trigger a ‘sell the news’ event, potentially causing BTC’s price to slump,” commented Bitcoin.com.