- Bitcoin halving’s price influence has diminished as new issuance gets smaller relative to the amount sold by long-term holders
- Demand from “whale” investors holding between 1,000 and 10,000 BTC is now a key driver of Bitcoin’s price
- Open Interest in Bitcoin futures is around 30 times higher than before the previous halving, indicating heightened market activity and bullish sentiment
A new report from crypto analytics firm CryptoQuant suggests the upcoming Bitcoin halving event may not impact the price as much as previous halvings. Instead, increased demand from long-term holders could be the key driver this time around.
Diminishing Effect of Halvings on Price
CryptoQuant argues the halving’s effect on price has diminished as new Bitcoin issuance becomes a smaller portion of the total supply. Currently, new monthly supply only makes up 4% of the total, much less than before previous halvings.
Long-Term Holders Now Biggest Source of Demand
Permanent holders are accumulating about 7 times more Bitcoin per month than is entering circulation through mining rewards. Their demand has grown significantly and now far exceeds new supply.
Previous Halving Price Impacts
After the 2016 halving, Bitcoin’s price increased around 4,200% to $19,800. Following the 2020 event, the price rose about 683% to $69,000. However, with diminishing new supply, the impact may be more muted this time.
Current Market Sentiment
Open interest in Bitcoin futures is very high heading into the halving, suggesting optimism among traders. Any pre-halving dip in price could present the “last bargain buying opportunity ever” according to some analysts.
Conclusion
While the halving has historically been very positive for Bitcoin’s price, its impact may be reduced as issuance becomes a smaller portion of supply. Instead, increased buying from long-term investors could drive the next bull run.
