A crypto analyst is bullish on Bitcoin (BTC), saying the market should expect a “supply shock of all supply shocks” when the network halves its miner rewards in roughly two months.
The Bitcoin Mining Event In Focus
Taking to X, Ted believes BTC prices will float higher after Bitcoin halves in April 2024. This event, set at the protocol level and scheduled roughly every four years (or after 240,000 blocks), will significantly reduce the amount of coins entering the market.
The reduction in this supply will make BTC deflationary, possibly increasing prices. This outlook is considering the expected demand that will continue to rise in 2024.
The Bitcoin network disburses 6.25 BTC roughly every 10 minutes, meaning 900 BTC is mined daily. After halving, that number will drop to 450 BTC.
This sharp contraction will lead to a supply shock, especially considering recent developments, such as the United States Securities and Exchange Commission’s (SEC) approval of spot Bitcoin exchange-traded funds (ETFs) in mid-January 2024.
Spot Bitcoin ETFs allow investors to gain direct exposure to the world’s most valuable coin without the hassle of storing private keys. This role is delegated to a regulated custodian like Coinbase Custody.
Spot Bitcoin ETF Issuers Buying More Coins
Since their launch in January, Ted notes that spot Bitcoin ETF issuers have accumulated over 160,000 BTC. According to Ted, the critical point is the rate at which these ETFs accumulate Bitcoin.
Specifically, if the current daily inflow of 5,800 BTC persists, Ted predicts it could easily surpass newly mined coins after halving. For this reason, this will create what the analyst describes as a “supply shock of all supply shocks,” where demand far outweighs available supply, potentially driving the price up.
Ted further points out that coins held by spot Bitcoin ETF issuers like BlackRock and Fidelity are catching up with those held by MicroStrategy, the business intelligence firm. Bitcoin Treasuries data reveals that MicroStrategy controls 190,000 BTC. On February 6, the public firm bought 850 BTC.
The latest data from Lookonchain shows that spot Bitcoin ETF issuers bought 4,189 BTC on February 6. Meanwhile, Grayscale offloaded 3,427 BTC.
BlackRock, Fidelity, Bitwise, and other issuers control 659,401 BTC as of February 6. The number keeps rising and now surpasses those of MicroStrategy. However, the figure includes those held by the Grayscale Bitcoin Trust (GBTC), which is gradually being liquidated.
Feature image from Canva, chart from TradingView