Digital asset manager Grayscale predicts that the 2024 Bitcoin halving will play out differently than the past three halvings in a new report highlighting the market impact of U.S. spot Bitcoin ETFs.
In a report titled “The 2024 Halving: It’s Really Different This Time,” Grayscale analysts point out that Bitcoin ETFs provide a “new, steady source of demand” that could offset selling pressure from mining issuance. .
The report states: price of bitcoin Although historically they have risen after each halving, other cryptocurrencies with halving mechanisms such as: Litecoin, we have not seen a similar price increase since the halving. The report authors also highlight that the price rise following the Bitcoin halving coincided with “significant macroeconomic events” such as the European debt crisis and the COVID-19 pandemic.
The report points to “evidence that miners have been preparing for the financial impact of the halving for a long time,” including raising funds and selling on-chain holdings in late 2023. This means miners are “well positioned” ahead of the halving, they suggest. —Even if some miners leave the market, the hash rate decline will adjust mining difficulty, keeping the network stable.
The report authors also point out the impact of Bitcoin ordinal inscriptions and ETF flows on the Bitcoin market structure. The former serves as an indicator of how miners may be incentivized to secure the network as block rewards decrease, while the general activity represents “a new path to securing the network through increased transaction fees,” they argue. do.
Meanwhile, the Bitcoin ETF saw $1.5 billion in inflows in just two weeks after launch, “absorbing the equivalent of three months of potential halving selling pressure.” Grayscale analysts do not expect this level of “pent-up demand” to persist, but a steady state of net inflows into the ETF could offset selling pressure from mining issuance, while higher levels of around $10 million a day remain. The influx even “reflects the effect of another halving.”
One Bitcoin ETF that has not enjoyed net inflows is Grayscale’s own GBTC. The switch to spot Bitcoin ETFs has led to billions of dollars in outflows as holders have taken the opportunity to cash out. Although these outflows appear to have slowed in recent weeks, funds continue to flow from GBTC to the competing Bitcoin ETF.
Edited by Stacey Elliott.
