Compared to recent years, the available supply of Bitcoin is at one of the lowest levels, fewer and fewer people want to part with the tool, also referred to as digital gold. At the weekend, the Bitcoin halving event, which will reduce the supply of cryptocurrency even further. Regarding the halving, Milk Road is one https://twitter.com/MilkRoadDaily/status/1780955058215207249 gathered the most important information about the demand and supply of the digital device.
The halving event is coming, but prices are not being cut in half
If someone is new to Bitcoin, don’t be afraid, the exchange rate will not fall by 50 percent, in fact!
There are a total of 21 million Bitcoins, of which 19.7 million are currently mined. Currently around 900 coins are mined per day and during the halving event this reward will be halved i.e. after the weekend, the supply of Bitcoin only increases by roughly 450 pieces per day.
The halving event was analyzed in detail here, but the most important thing to know is that, based on the experience of previous years, after the halvings (of which there have been three so far) the exchange rate skyrocketed.
The supply is reduced not only because of the halving
Blockchain users have so far lost approximately 1.5 million Bitcoins due to forgotten access IDs and coins sent to the wrong address. This means the total amount of Bitcoin available in the future No one has access to 7 percenti.e. they cannot be sold.
Not only the lost coins have reduced the supply that can be bought on crypto exchanges, but also the more aware users: the available 45 percent of coins have not participated in a transaction for more than 3 years. In addition, the number of long-term investors is constantly increasing, i.e. less and less people are willing to part with their crypto-assets in the short term.
The number of Bitcoin Whales (i.e. large investors who have more than 10,000 Bitcoins) also shows a growing trend. Thanks to all these the supply of Bitcoin available on the exchange has dwindled significantly in recent years, while 17 percent of the total supply was traded in the short term in 2020, nowadays this figure is closer to 12 percent. The users also do not plan to sell the devices that have been saved from the markets to secure external Bitcoin wallets in the near future.
However, demand exploded
After the US Securities and Exchange Commission (SEC) granted permission in January to Bitcoin ETFfor trading, institutional capital also appeared on the crypto markets. These are exchange-traded funds so far approximately 837,000 Bitcoins have been accumulated, which is equivalent to 3214 Bitcoins per day. If you compare this number with the 900 new coins mined per day, you can understand why the price of the leading cryptocurrency skyrocketed in the spring: demand far exceeded supply.
In addition, a new buyer appeared on the market: it was led by Michael Saylor MicroStrategy transformed its business model and effectively a into a Bitcoin holding company advanced. The company is more than It holds 214,000 Bitcoins, and according to the CEO, there are no plans to sell it at all. Their purchases for the past year are equivalent to 200 Bitcoins per day.
He also joined the customers El Salvador. The Central American country is the first state where the Bitcoin is accepted as official currency, and has accumulated 6,000 of them so far. Their Prime Minister is determined in his plan to increase the number of Bitcoins in the treasury by at least 1 coin per day.
THE Tetherthe world’s largest stablecoin company, also bought heavily in the last quarter: total increased its portfolio by almost 9,000 pieces, in which he currently holds 75,354 Bitcoins. This meant buying an average of 60 Bitcoins per day.
In addition, retail small investors are only now starting to realize that the big buying spree has not yet started.
Quick math
After the halving, the amount of Bitcoins issued per day will decrease from 900 to about 450.
- ETFs 3,200 units,
- 200 pieces of MicroStrategy,
- and Tether 60 pieces
takes an average of one day.
Only these three players want to buy multiples of the daily new supply. And if we add to this the newly appearing retail investors, as well as other factors that reduce supply, everything is a huge for exchange rate growth: the one at the bottom because there is a huge demand for a low supply.
Of course, it is important to keep in mind that cryptocurrencies are very volatile assets, their highly fluctuating exchange rate is influenced by many other factors. As a result of the recently intensified conflict in the Middle East, the price of Bitcoin fell by 10 percent in a short time, so there is no guarantee of success in this investment.
Before jumping headlong into opportunities that promise high returns, we always consider whether they meet your personal goals, our investment time frame, and our risk tolerance.
