© Reuters
Investing.com – Supply growth is expected to fall below 1% for the first time next month as the “halving event” begins, underscoring the popular cryptocurrency’s scarcity premium and likely will fuel the current bull run just as institutional investors join the race to 'hodl' the popular cryptocurrency.
“Bitcoin supply growth is currently around 1.7% and will drop to just under 1% for the first time in Bitcoin history,” at the next halving event, planned “in sometime on April 17,” Director of Education and Governance Initiatives at Web3 Foundation told Investing.com's Yasin Ebrahim in an interview on Thursday.
Halving events, which occur once every four years, halve the amount of bitcoin that miners produce on the bitcoin blockchain or network, hence “halving.”
But what exactly is being halved?
The only way to produce bitcoins is to produce blocks for the Bitcoin network. Currently, each block produces 6.25 bitcoins that are distributed to miners responsible for validating transactions stored in blocks on the blockchain. But in the next halving event, this reward will be halved to 3,125 BTC, which will slow down the speed at which new bitcoins are minted and increase their scarcity and price.
Around 19.6 million bitcoins have already been mined, approximately 93.59% of the total 21 million bitcoins. “In the future, miners are going to fight for much, much less issuance of Bitcoin in each block,” Laboon said, adding that there is still a long way to go until the last block is mined, which is expected in 2140.
Since its inception in 2009, there have been three halving events that have reduced bitcoin supply growth from a rate of 25% to just under the current 2%.
Halving history appears to be a smile for bitcoin bulls
During the previous four-year halving cycle, the price of bitcoin has followed a distinct path through three main periods: pre-halving, halving, and post-halving.
In the previous cycle in May 2020, Bitcoin was trading around $9,000 before the halving, but after the halving on May 11, 2020 it started a bull run to an all-time high of $68,982, 20 in November 2021 before undergoing a significant correction.
The 18-month period between Bitcoin's halving and peak price is consistent across all historical data from previous halving cycles. Given that the current peak in the price of BTC is expected to be reached during the third week of October 2025, at a time when institutional investors are entering the scene (following the launch of a spot bitcoin ETF in January this year), many are optimistic that there will be a long way to go in the current bull market.
US-based spot Bitcoin ETFs have accumulated more than $60 billion in assets under management as of March 16, data from Coinglass showed, with Blackrock's (NASDAQ:) iShares Bitcoin Trust and Fidelity Wise Origin Fidelity's Bitcoin Fund (NYSE:). ) leading the charge.
Bitcoin is evolving. . .
After the last block is mined and there are 21 million bitcoins in circulation, many worry about what the future holds for the bitcoin blockchain, as miners may be less incentivized to continue maintaining the blockchain. network without the reward for producing new blocks.
But use cases for bitcoin, beyond simply transferring bitcoin from one user to another, are beginning to emerge, increasing activity on the network and related transaction fees that can prove far more lucrative than the reward miners receive. to produce. new blocks.
“In fact, we have seen over the last year that there have been other uses of the Bitcoin network besides simply transferring Bitcoin, the most famous of which are ordinals,” which can be thought of as “super NTF (non-fungible tokens).” ”Laboon said.
“As time goes on, this fee market will take over from new Bitcoin issuances to ensure that miners continue to get paid for doing the job of maintaining security on the network,” he added.
The rise in creating layer two technologies or off-chain networks, built on top of layer 1 blockchains like bitcoin, is a “very big growth area” for bitcoin, Laboon added, as it allows people to ” use the security of bitcoin to run more complicated programs that were made, sometimes on other blockchains.”
