According to a recent research report from CryptoQuant, the anticipated supply shock resulting from Bitcoin's halving may not have the significant impact on its price as commonly believed by many investors. It suggests that the diminishing effect of the halving is attributed to the decreasing issuance of new Bitcoins relative to the number sold by long-term holders. Instead, the report identifies the increased demand from investors holding substantial amounts of Bitcoin as the primary driving force behind Bitcoin's price dynamics post-halving.
CryptoQuant highlights a surge in demand from whales, those holding between 1,000 and 10,000 Bitcoin, reaching "all-time highs" and registering an 11% month-on-month increase. Despite the traditional expectation that halvings reduce supply, instances between 2021 and 2023 have shown that demand from long-term holders often outstripped supply during the same periods. The current disparity between supply and demand is notably wider than in previous cycles, potentially mitigating the halving's typical impact on Bitcoin's price.
Presently, the monthly accumulation of Bitcoin by long-term holders surpasses the issuance of new Bitcoins by a significant margin, with holders adding up to 200,000 Bitcoin monthly compared to the issuance of approximately 28,000 Bitcoin. Following the halving, the monthly issuance is projected to drop to around 14,000 Bitcoin. Furthermore, the total issuance of Bitcoin has plummeted to just 4% of the total available supply, a stark contrast to pre-halving levels of 69%, 27%, and 10% during previous halvings.
Historically, Bitcoin's price experienced substantial surges following halving events. After the 2016 halving, Bitcoin soared by approximately 4,200% to reach $19,800, while after the 2020 halving, it surged by nearly 683% to hit $69,000. The upcoming halving, scheduled for April 20, will see the block reward reduced from 6.25 Bitcoin to 3.125 Bitcoin. Despite Bitcoin trading at $68,764 at the time of the report, other indicators suggest investor optimism towards the halving's potential impact on price.
CoinGlass data indicates a significant increase in Bitcoin's open interest (OI) to $78.36 billion, approximately 30 times higher than the OI trading volume observed before the 2020 halving. Rising OI values reflect heightened market activity and trader sentiment. This sentiment is echoed by anonymous trader Rekt Capital, who sees any potential downside in Bitcoin's price before the halving as the last opportunity for dip buying before the 2024 halving, as announced in an X post on April 9.
