Sky-high Bitcoin ETF flows and multiple price gains mean the next Bitcoin halving is now expected to occur on April 15th, rather than the once meme-friendly 4/20.
Bad news for meme fans who loved the idea of celebrating half-life and affinity for cannabis on the same day. However, this is good news and also an indicator of trader sentiment.
Just over a month ago — and on Valentine’s Day —decryption I wrote about a very meme-friendly hypothetical situation where Bitcoin reaches $69,000 and the halving could occur on April 20th. Bitcoin hit that price target on March 5th.
But why was the half-life advanced by a few days? This is due to the finite block space of the Bitcoin network and the fact that halving is scheduled to occur at block height 840,000, or after the network has processed 840,000 blocks worth of transactions. As of this writing, the current block height on the BTC network is 834,194.
Each block in the Bitcoin network has room for approximately 2,700 transactions. Therefore, when there are a lot of transactions being processed on the network (e.g. hitting a new all-time high, a sudden crash after a rally, or a crash on one of the largest exchanges), BTC sets another new all-time high. Other First, the network has more transactions to process than usual.
To put this in context, BTC’s average daily trading volume as of February 14 was $24 billion, according to CoinGecko data. Of course, there was much higher trading volume (about $52 billion) on January 11th, when 10 new spot Bitcoin ETF applicants began trading in the US.
Things have quieted down since funds were withdrawn from the Grayscale Bitcoin Trust (GBTC), putting a lot of downward pressure on Bitcoin. The way a Bitcoin-based ETF works is that when an investor redeems a stock, the issuer provides cash and then sells the BTC backing the stock.
JP Morgan analyst Nikolaos Panigirtzoglou estimated that by the end of January, GBTC had recorded outflows worth $4.3 billion since its conversion to a spot Bitcoin ETF.
However, since mid-February, average daily trading volume has reached up to $40 billion worth of BTC. If you look at average daily trading volume since early March, when Bitcoin began hitting all-time highs for the first time since 2021, it’s close to $52 billion. The biggest outlier is Wednesday, March 6th, the day after the first ATH news broke last week. In one day, nearly $1 trillion worth of Bitcoin was traded.
