Key Points
- The forthcoming Bitcoin halving could trigger a significant supply shock, especially given the current high demand from spot Bitcoin exchange-traded funds.
- Despite this, some Bitcoin advocates believe the halving will have a minimal impact on the overall supply and price.
The anticipated halving of Bitcoin (BTC) could lead to a considerable supply shock. This is particularly relevant in the context of the current high demand from spot Bitcoin exchange-traded funds (ETFs).
The Impact of Bitcoin Halving
Samson Mow, CEO at Bitcoin technology company JAN3, predicts that the halving will cause a significant supply shock. He suggests that with U.S. ETFs currently at 5-10x daily supply, post-halving demand could be 10-20x supply.
Mow also pointed out that the launch of Bitcoin ETFs in Hong Kong could attract additional capital from Asian investors. These ETFs will have in-kind provisions, allowing investors to redeem their investments for the underlying Bitcoin, an option not available with U.S. Bitcoin ETFs.
Since their launch in January, U.S. Bitcoin ETFs have seen an overall increase of 212,000 BTC ($13.7 billion). However, projections for the Hong Kong ETFs suggest they might only attract around $500 million of total AUM.
Varied Opinions on the Halving
Despite these predictions, not all Bitcoin advocates are convinced about the significant impact of the halving. John Carvalho, CEO of Bitcoin development company Synonym, argues that the halving’s effect on price and overall supply is minimal. He believes that any price increases are more likely due to bull markets correlating with the halving schedule.
The Bitcoin halving is scheduled to take place tonight, with the rewards per block decreasing from 6.25 BTC to 3.125 BTC for the next four years.