Crypto analyst Nicholas Merten believes that the next Bitcoin (BTC) halving will not ignite the renewed bull market that many traders and analysts expect.
In a new video update, Merten tells his 512,000 YouTube subscribers that, unlike many other analysts, he does not believe the 2024 BTC halving will trigger a huge rally like in the past, as the impact on new supply will not be sufficient as a catalyst. .
Bitcoin halvings occur every four years, cutting BTC mining rewards by half and therefore reducing the amount of new supply entering the market. The next one is expected on April 15.
Says Merten,
“There is a big misconception here. This halving of the reduction, while it technically halves inflation, the problem is that the reduction in inflation in nominal terms – in real, actual impact of terms – gets weaker and weaker and weaker over time. And this also explains why Bitcoin has seen diminishing returns over time. It is not expanding as quickly as in the past.”
The next halving will reduce miner rewards from approximately 6.25 Bitcoin per block to 3.125 Bitcoin per block. Merten says that since the value of the cut is relatively small compared to BTC’s total market cap, he doubts it could lead to a big rally.
“That means 164,250 fewer Bitcoins are minted each year, or $4.4 billion at current market rates with Bitcoin ending up on the spot market, potentially for miners who sell it to cover their operating costs for electricity, for computer hardware. .
Looking at a daily time frame, that’s 450 Bitcoin less per day, or essentially $12 million dollars less in potential selling pressure at current market rates. That may sound like a lot, something that could even herald a new bull market. But while these numbers may sound big, when we compare them to Bitcoin’s valuation and size as a market, it doesn’t start to look so optimistic.
Here, think about Bitcoin’s market cap and look at its current valuation as an asset, rather than the entire crypto market. Bitcoin currently has a market cap of $523 billion, almost half a trillion dollars in market cap. So if we take that $4.4 billion figure, which sounds like a lot, we really start to realize that it’s not even a percentage of Bitcoin.”
Bitcoin is trading at $26,776 at the time of writing.
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