Bitcoin’s Halving Leads to Potential 5x Increase in Demand vs. Supply: Bitfinex Analysts

The recent Bitcoin mining reward halving has sent shockwaves through the cryptocurrency market, with analysts at Bitfinex projecting that the demand for Bitcoin could potentially be five times greater than the available supply.

Following the halving on Saturday, the per-block reward paid to miners was cut in half to 3.125 BTC from 6.25 BTC. This reduction in rewards means that the total number of new coins added to the supply daily could drop to $30 million, a significant decrease compared to the average daily demand for U.S. spot ETFs.

Analysts at Bitfinex predict that the new supply added to the market post-halving could drop to $30 million per day, as smaller miner operations are forced to shut down. This supply squeeze has already begun, with the total number of new coins added to the supply daily dropping to 450 BTC from the pre-halving average of 900 BTC.

The introduction of spot-based ETFs in the U.S. has allowed investors to take exposure to cryptocurrency without owning it, leading to an increase in daily inflows. However, miner selling could slow down as miners ran down their coin inventory in the months leading up to the halving to fund equipment upgrades.

Investors are also increasingly taking direct custody of their coins, weakening the market’s supply side. Bitcoin’s price has remained strong at $66,660, up over 5% since the halving, defying expectations of a price correction.

Overall, the Bitcoin market is experiencing a shift in supply and demand dynamics following the halving, with potential implications for the future of the cryptocurrency.