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Bitcoin Halving Won’t Affect the Price as Much as Expected: Crypto Whales Predicted to be the “Key Driver”

Diminishing effect of Bitcoin halving on price, and the role of whales 

As the highly anticipated 2024 Bitcoin halving event approaches, a new research report from CryptoQuant sheds light on the shifting dynamics influencing the cryptocurrency's price.

Key takeaways:

  1. Why Bitcoin halving matters and its impact on its price is diminishing due to the smaller issuance relative to selling from long-term holders.
  2. Demand from whales holding between 1,000 and 10,000 Bitcoin is near its highest ever, suggesting investor optimism.

CryptoQuant, a crypto analytics firm, argues in a recent research report that the supply shock of the upcoming Bitcoin halving may not have as significant an impact on the cryptocurrency's price as many investors anticipate. The report states: 

"We argue that the effect of the halving has been diminishing, as the new issuance of Bitcoin gets smaller relative to the amount of Bitcoin selling from long-term holders."

Instead, the "key driver" affecting Bitcoin's price post-halving is expected to be the increased demand from investors with substantial Bitcoin holdings. CryptoQuant notes that demand from whales holding between 1,000 and 10,000 Bitcoin has grown to "around its highest ever," with an 11% month-on-month increase.

Demand from long-term holders surpasses new issuance

Between 2021 and 2023, there have been instances where the monthly demand from long-term holders has exceeded the supply within the same timeframe. However, the current gap between them is much larger than it has ever been, suggesting that the halving's effect on Bitcoin's price action might not be as powerful as in the past, given the ongoing monthly supply deficit.

According to CryptoQuant: 

"Permanent holders are adding as much as 200K Bitcoin per month to their balances, much more than the ~28K Bitcoin issuance. Bitcoin monthly issuance will decrease to ~14K after the halving." 

Furthermore, the total issuance of Bitcoin has plummeted to only 4% of the total available supply, a significantly smaller proportion compared to previous Bitcoin halvings.

Investor optimism remains high despite diminished halving impact

Despite the diminishing influence of the Bitcoin halving on its price, other indicators suggest that investors remain optimistic about the upcoming event, currently slated for April 20, as a major catalyst for Bitcoin's price to rise higher. Open Interest (OI) in Bitcoin, a measure of the total value of all outstanding or unsettled Bitcoin futures contracts across exchanges, is currently at $78.36 billion, roughly 30 times higher than the OI volume recorded 11 days before the previous halving in May 2020.

Pseudonymous Rekt Capital, a popular figure on X (formerly Twitter), suggested to his 447,000 followers that any price dip in Bitcoin between now and the halving is likely to bounce back quickly, stating:

"Do you realize whatever downside Bitcoin experiences before the halving, if any, will be the very last bargain-buying opportunity in the 2024 pre-halving period ever?"