Bitcoin’s Inflation Rate Is Now Lower Than Gold: Report

It’s been about four days since Bitcoin’s (BTC) fourth halving event, and market observers have accumulated enough data to make early judgments about its effects.

First, Bitcoin’s supply inflation rate collapsed as expected. Mined roughly once every 10 minutes, each Bitcoin block now generates 3.125 new BTC, half the previous 6.25 BTC block subsidy.

Before the halving, 900 BTC were created every day, resulting in an inflation rate of 1.7%. The new figure roughly equates to 450 BTC per day, with an annual inflation rate of 0.85%. According to a new report from Glassnode, these metrics place the network’s supply issuance rate well below gold’s 2.3%. It is a historically important asset that is often compared to Bitcoin.

Bitcoin bulls argue that Bitcoin’s digital nature makes it more divisible and portable than precious metals, making BTC a modern medium of exchange. Thanks to halving, Bitcoin supply will be more limited than gold. This means that, in theory, it is better able to store value over time rather than inflating it.

However, in terms of Bitcoin’s price movements, some analysts believe the halving is otherwise irrelevant.

“Issuance is a fraction of the on-chain transfer volume, spot volume, and derivatives volume we see today and currently represents less than 0.1% of the total capital moving and trading on any given day,” Glassnode said. -Tuesday Chain Analysis Report.

This means that the number of coins that halving brings to the market will be reduced by a sea compared to the number of existing coins that are traded daily and affect the price. in video presentation Last week, Glassnode senior analyst James Check called halving an “epic game” that “really doesn’t matter.”

Unlike previous halvings, the price of Bitcoin broke previous all-time highs before the end of the fourth halving, a seemingly outperformance due to the launch of a US Bitcoin spot ETF a few months ago. BlackRock’s Larry Fink repeatedly touted Bitcoin as a form of “digital gold” to investors before the fund became active.

However, when measuring price growth between halvings, asset prices rose only 569% in the fourth era, compared to 1,336% in the third era. Glassnode suggests that this shows BTC investment returns decreasing between halvings. This is “a natural consequence of the growth in market size and the scale of capital flows required to move it.”

The mining industry has also appeared to have suffered no major damage so far. Despite the significant reduction in miner revenue caused by the halving, Bitcoin’s network hash rate has been near all-time highs in all halving events, including the most recent.

Now, on-chain data shows that miner profits have actually surged since last week’s halving, thanks to a rise in network transaction fees thanks to the newly launched Bitcoin token protocol “Runes”.

Edited by Ryan Ozawa.