Cryptocurrency exchange and trading platform, Bybit, recently released a report discussing the effects of the upcoming Bitcoin halving event on the supply dynamics of Bitcoin within exchanges in the crypto space. This report provides valuable insights into how the halving event could enhance scarcity and significantly influence the price of BTC.
Bybit disclosed that the Bitcoin reserves within the world’s crypto exchanges have been depleting at a rapid pace, leaving only nine months of BTC supply left on exchanges. With just two million Bitcoin left in its total supply, a daily influx of $500 million into Spot Bitcoin ETFs would result in approximately 7,142 BTC leaving exchanges daily. This suggests that it would take only nine months to completely consume all of the remaining BTC reserves on exchanges.
Impact of Halving Event
One of the major contributors to this supply squeeze is the upcoming Bitcoin halving event, which will reduce the cryptocurrency’s total supply by 50% by cutting Bitcoin miners’ rewards in half. Bybit also mentioned that after the halving event, the sell-side supply of BTC flowing into Centralized Exchanges (CEXs) will significantly decrease, making Bitcoin’s supply squeeze worse.
Bybit compared Bitcoin’s supply after the halving event with that of gold and revealed that Bitcoin is steadily becoming one of the safest investment choices, even for seasoned and sophisticated investors within the crypto space. The report suggests that the Bitcoin halving event will greatly impact the cryptocurrency’s scarcity factor, making it an even rarer asset than gold.
Stock-to-Flow Ratio Analysis
Based on the Stock-to-Flow (S2F) ratio, Bybit disclosed that Bitcoin’s S2F ratio is around 56 currently, while gold’s ratio is 60. After the halving event this April, Bitcoin’s S2F ratio is projected to increase to 112. This sharpens the narrative of Bitcoin as a scarce digital asset, akin to digital gold. The Co-founder and CEO of Bybit, Ben Zhou, stated, “Each Bitcoin halving sharpens the narrative of Bitcoin as not just a currency, but a scarce digital asset, akin to digital gold. This upcoming halving in 2024 will thrust BTC into an era of unprecedented scarcity, making it twice as rare as gold.”
Another report disclosed that the price of Bitcoin would experience significant upward pressure post-halving, suggesting that BTC’s supply squeeze could potentially propel its price to new heights during this period. However, several crypto analysts predict that the post-halving increase in Bitcoin’s price would be less remarkable than the early pre-halving surge, which saw the price of Bitcoin hitting new all-time highs of more than $73,000.
The Bitcoin halving event is expected to have a profound impact on the supply dynamics of Bitcoin within exchanges. The scarcity factor of Bitcoin is likely to increase significantly, making it an even rarer asset than gold. Investors and traders should be prepared for potential price fluctuations and volatility in the cryptocurrency market following the halving event. Conducting thorough research and staying informed are essential for making informed investment decisions in this evolving landscape.
Leave a Reply