As the halving of Bitcoin draws near, analysts at CryptoQuant have noticed a noteworthy trend: demand for the cryptocurrency is exceeding supply for the first time ever. Monthly acquisitions by long-term Bitcoin holders currently total almost 200,000 BTC, which is much more than the 28,000 BTC that is issued each month. This mismatch between supply and demand signals a dramatic change in the dynamics of the Bitcoin market, with the upcoming halving predicted to reduce monthly issuance to roughly 14,000 BTC, according to CryptoQuant experts.
Commenting on the impending halving, co-founder of Tezos Arthur Breitman called it a “reduction in security budget.” Although the shift in miner payouts may mitigate potential overpayments for security in the short run, he contended that it highlights the necessity of future changes to emission policies to guarantee ongoing security.
“Today, this is a good thing because Bitcoin likely overpays for security at the moment, but it’s also a reminder that, in the long run, the emission policy will have to change to maintain security. Financial projections based on the halving are unserious.”Arthur Breitman
Bitcoin Divergent Executive Perspectives
Though Breitman has issued a warning, professionals in the cryptocurrency space have differing views. Former BitMEX CEO Arthur Hayes predicts drops in Bitcoin prices before and after the halving, blaming it on a lack of dollar liquidity at the time. Conversely, Marathon CEO Fred Thiel argues that the market may have already priced in the impact of the halving, pointing to the successful approval of spot exchange-traded funds (ETFs).
The forthcoming halving in mid-April will see mining rewards drop from 6.25 to 3.125 BTC each block, which has BTC miners bracing themselves for lower payouts. The Bitcoin network protocol adjusts automatically when it reaches a predetermined block height, meaning this procedure is automated. Around 2140 is when it is predicted that miners will finish processing all 21 million Bitcoins, at which point their only source of income will be transaction fees.
