TL;DR
- Investor Confidence: Despite economic uncertainty, Bitcoin exchange outflows have increased, indicating investors are moving assets to cold storage in anticipation of price rises, suggesting a strong belief in Bitcoin’s long-term value.
- Miners’ Strategy: Miners are adapting to the reduced block reward by holding back BTC from exchanges, possibly using it as collateral to upgrade infrastructure, which helps distribute selling pressure and mitigate market crash risks.
- Supply vs. Demand: The daily issuance rate of Bitcoin post-halving is significantly lower than the daily net inflow from spot Bitcoin ETFs, hinting at a potential for price appreciation due to the supply-demand imbalance.
Following Bitcoin’s recent fourth halving on April 20, 2024, the cryptocurrency market is said to be undergoing some interesting changes. Bitfinex has released their new report, “Bitfinex Alpha,” which looks into the data on the blockchain and shows promising signs for Bitcoin, even with the economic uncertainty in the US.
The report states that Bitcoin exchange outflows are at levels not witnessed since January 2023, showing that numerous investors are transferring their assets to cold storage, in anticipation of potential price rises. This pattern implies a rising belief in Bitcoin’s long-term value, despite the market adjusting to the recent halving event.
Surprisingly, the expected pre-halving decrease in price, usually caused by long-term holders selling off their assets, has not occurred yet. The Bitfinex Alpha report indicates that new investors can handle this selling pressure, showing how strong Bitcoin’s market is at the moment.
Bitcoin Miners’ Response to Reduced Block Reward: Strategic Adjustments
Miners are also adjusting to the lower block reward by changing their tactics. According to the report, there is a drop in the number of BTC being sent to exchanges by miners. This suggests that they may be selling or using their assets as collateral to improve their infrastructure before selling. By doing this, they are spreading out the selling pressure over a longer period, reducing the chances of a sudden market crash.
Bitfinex also mentioned in their report that the daily issuance rate of Bitcoin post-halving, adding an estimated $30 to $40 million worth of supply each day, is far surpassed by the daily net inflow of around $150 million from spot Bitcoin ETFs. The report highlights the imbalance between supply and demand, suggesting the potential for more price appreciation in the future.
The report warns that how the market reacts to geopolitical risks will give important information on the future of Bitcoin as a “digital gold” asset. The Bitfinex Alpha report also emphasizes the interplay between international and domestic factors that impact the U.S. economy.
In conclusion, the post-halving era for Bitcoin is showing decidedly positive on-chain dynamics. The resilience of Bitcoin’s market structure, the strategic adjustments of miners, and the significant demand from spot Bitcoin ETFs all contribute to a bullish outlook for Bitcoin amid economic uncertainty.
