Cryptocurrency exchange Bybit recently released a report discussing the effects of the upcoming Bitcoin halving event on the supply dynamics of Bitcoin within the exchanges in the crypto space. This report provides valuable insights into how the halving event could increase scarcity and greatly influence the price of BTC.
Bybit’s report reveals that the reserves of Bitcoin within the world’s crypto exchanges have been diminishing rapidly, with only nine months’ worth of BTC supply left on exchanges. The analysis suggests that with just two million Bitcoin remaining in total supply, a daily influx of $500 million into Spot Bitcoin ETFs could result in approximately 7,142 BTC leaving exchanges daily. At this rate, it would take only nine months to deplete all remaining BTC reserves on exchanges.
Bybit emphasizes that a significant factor contributing to this supply squeeze is the impending Bitcoin halving event, which will reduce the cryptocurrency’s total supply by 50% by cutting Bitcoin miners’ rewards in half. As a result, the sell-side supply of BTC entering Centralized Exchanges (CEXs) is expected to decrease after the halving event, exacerbating the supply squeeze.
In its report, Bybit draws a comparison between Bitcoin’s supply dynamics post-halving with that of gold. The exchange highlights Bitcoin’s attractiveness as an investment choice, especially for sophisticated investors within the crypto space. Bybit predicts that Bitcoin’s scarcity factor will be significantly enhanced following the halving event, making it an even scarcer asset than gold. According to the Stock-to-Flow (S2F) ratio, Bitcoin’s S2F ratio is currently around 56, while gold’s ratio is 60. After the halving event in April, Bitcoin’s S2F ratio is expected to double to 112.
Ben Zhou, the Co-founder and CEO of Bybit, asserts that each Bitcoin halving strengthens the narrative of Bitcoin as a scarce digital asset, similar to digital gold. He predicts that the halving event in 2024 will propel BTC into an era of unprecedented scarcity, making it twice as rare as gold. This highlights the significance of Bitcoin’s rarity in the aftermath of the halving event.
Another report mentioned in the article suggests that the price of Bitcoin will face significant upward pressure following the halving event. This could potentially drive BTC’s price to new highs due to the supply squeeze caused by the halving event. While some analysts predict that the post-halving price increase may not surpass the pre-halving surge that led to Bitcoin hitting new all-time highs, the overall outlook remains positive for Bitcoin’s price trajectory.
The upcoming Bitcoin halving event is expected to have a profound impact on the supply dynamics of Bitcoin in the crypto space. With the depletion of Bitcoin reserves on exchanges and the enhanced scarcity post-halving, Bitcoin’s position as a unique digital asset is reinforced. Investors and analysts are closely monitoring the price trends surrounding the halving event, anticipating potential price surges and increased market volatility.
Disclaimer: The information provided in this article is for educational purposes only and does not constitute financial advice. Readers are advised to conduct their own research and exercise caution when investing in cryptocurrencies.