Key Points

Bitcoin’s post-halving demand could surge by five times, Bitfinex estimates.
If this happens, it could set the stage for new Bitcoin price rallies.

Bitcoin saw its fourth halving finalized on April 20 when the miner rewards were slashed from 6.25 BTC to 3.125 BTC.

The latest estimates from Bitfinex state that the new BTC supply added to the market could drop to $30 million per day. This would amount to less than five times the average daily inflows into the Bitcoin ETFs.

Bitcoin’s demand could grow 5 times higher than the supply

Bitfinex notes that Bitcoin’s recent mining reward halving has altered the market in such a way that it could lead to the BTC demand growing five times higher than the supply.

During the past weekend, the miner reward was cut in half, going from 6.25 BTC to 3.125 BTC. The halving of rewards means that the notional value of the total number of new coins that are added to the daily supply could drop to $30 million.

Such a decrease could be significant, equating to five times less compared to the average daily demand for Bitcoin ETFs.

Bitfinex analysts stated that with the daily issuance rate declining after the recent halving event, they estimate that the new supply added to the market, or the new Bitcoin mined, would amount to about $40-$50 million in USD-notional terms based on issuance trends.

This could possibly drop over time to $30 million per day, according to the analysts, including both active and dormant supply and miner selling, especially as smaller miner operations are forced to shut down business.

The same reports reveal that the average daily net inflows from BTC ETFs dwarf the number at over $150 million, even though flows have moderated or turned negative during the past few weeks.

Glassnode data shows that the supply squeeze has already begun, and since the halving event, the total number of new BTC added to the supply on a daily basis dropped to 450 BTC from the pre-halving levels of 900 BTC.

The daily coin issuance has slowed after halving. (Glassnode)

The US SEC approved spot Bitcoin ETFs in the country at the beginning of 2024, a move that allows investors to gain exposure to the digital asset without owning it.

According to Bitfinex, the average daily inflows into ETFs since the beginning will remain constant in the months to come.

The analysts also noted that the approval of BTC ETFs would open the path to new demand, mirroring the introduction of gold ETFs back in 2004. These allowed investors to gain exposure to gold without the need for physical storage.

The exchange also highlighted that investors are taking direct custody of their coins and this leads to a weakened market supply side. Bitfinex notes that current on-chain data shows that Bitcoin exchange outflows are reaching peaks that have not been seen since January 2023.

This suggests that a lot of investors are moving their holdings to cold storage ahead of the price increases.