Bitcoin Halving Triggers Supply Squeeze as Investor Demand Heats Up

Bitcoin's Halving Impact

Bitcoin's recent halving event has fundamentally shifted the market dynamics, potentially leading to a significant imbalance between supply and demand. The reward for mining Bitcoin has been halved from 6.25 to 3.125 BTC per block, impacting the inflow of new coins into the system and thus potentially increasing their value.

Market Supply and Demand

Bitfinex analysts suggest that the daily supply of new Bitcoin could decrease to $30 million worth, far less than the average demand from U.S. spot ETFs. Considering the steady inflows into ETFs and the possible slowdown in miner selling, the supply squeeze effect is already noticeable. Post-halving, the daily addition of new coins has plummeted, while more investors are choosing to take direct custody of their holdings.

Investor Behavior and Price Trends

Despite the active selling by long-term holders, Bitcoin's price has remained resilient, even increasing by over 5% since the halving. This trend defies the typical expectations of a pre-halving price drop, suggesting that new market players are absorbing the selling pressure, creating a firm foundation for Bitcoin's price stability and potential growth.