According to analysts at leading cryptocurrency exchange Bybit , Bitcoin (BTC) becomes more scarce after each halving, but the next event taking place in the next four days will make this digital asset rarer. double gold.
A report on what to expect before and after the Bitcoin halving has revealed that BTC will be limited in supply after the event, as reserves across all centralized exchanges could be consumed within nine months.
Rare as gold
Bybit says Bitcoin 's stock-to-flow (S2F) model proves its claim as data has shown that BTC becomes more scarce than gold after each halving. The S2F ratio is calculated by Chia an item's circulating supply by its annual production to derive a measure of scarcity.
At the time of writing, Bitcoin's S2F ratio is hovering around 56, while gold's is 60. After the halving, Bitcoin's ratio is expected to double to 112.
The halving slows the supply by reducing the rate of BTC production, and a supply squeeze may be inevitable. Bitcoin is already seeing early signs of a short squeeze, which will get worse after the halving.
BTC supply for Bitcoin spot exchange-traded funds (ETFs) typically comes from centralized exchanges as investors realize their profitable positions and Miners sell their block rewards.
When mining rewards are cut and investors HODL their assets in cold storage or decentralized wallets, miners will not sell as quickly and the sell-side supply flowing to exchanges will decrease.
Currently, about two million bitcoins are being held in reserve on the centralized exchange. Assuming spot Bitcoin ETFs have daily Capital of $500 million, approximately 7,142 BTC will leave exchange reserves daily, suggesting that reserves will last only 9 months after halving .
“With this in mind, it is not surprising that Bitcoin price could continue to rise before the halving or even after, as tight supply pushes prices to another new record,” Bybit said.
While halving is known to cause bitcoin prices to rise, analysts find the cycle complicated and remain uncertain about the impact of the upcoming event as BTC has recorded new highs.
Some believe that the post-halving recovery will be less notable than what the market has experienced following past events.
However, market experts believe that demand will drive this post-halving BTC increase as spot Bitcoin ETFs reach their full potential.
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