Digital asset management firm Grayscale predicts that the 2024 Bitcoin halving will play out differently than the previous three, in a new report highlighting the market impact of the US Spot Bitcoin ETF.
In a report published on Friday titled “2024 Halving: This Time It’s Not Real”, Grayscale analysts said Bitcoin ETFs could create a “new stable of stocks” that could offset selling pressure from mining issuance. It points out that it provides a source of demand.
The report points out that:Historically, the price has increased after each halving, and we warn that this is also the case for other cryptocurrencies with halving mechanisms, such as: , we have not seen similar price increases after the halving. The report’s authors also highlight that the rise in Bitcoin prices following the halving coincided with “significant macroeconomic events” such as the European debt crisis and the COVID-19 pandemic.
The report points to “evidence that miners have been preparing for the economic impact of the halving for a long time,” including raising funds and selling their holdings on-chain in late 2023. They suggest this means miners are “well positioned” for the halving. — and even if some miners withdraw from the market, the lower hashrate will adjust the mining difficulty and ensure network stability.
The report’s authors also warn about the impact of Bitcoin’s ordinal notation and ETF flows on Bitcoin’s market structure. They argue that the former serves as a bellwether for how miners will be incentivized to protect the network as block rewards decrease, and that normal activity “maintains network security through increased transaction fees.” It claims that it represents a new path for the future.
Meanwhile, the Bitcoin ETF saw $1.5 billion in inflows in just two weeks after opening, “absorbing roughly three months’ worth of potential post-halving selling pressure.” Grayscale analysts don’t expect that level of “pent-up demand” to be sustained, but stable net inflows into the ETF could offset selling pressure from mining issuance. While this is possible, he notes that even higher levels of inflows, on the order of $10 million per day, are possible. “Reflects further half-life effects.”
One Bitcoin ETF that has not enjoyed net inflows is Grayscale’s own GBTC, which has seen billions of dollars in outflows since it was converted to a Spot Bitcoin ETF as holders seize the opportunity to cash out. It was observed. These outflows appear to have slowed in recent weeks, but money continues to flow from GBTC into competing Bitcoin ETFs.
Edited by Stacey Elliott.