Bitcoin's looming half leads to accelerated attrition
Date
4/22/2024 6:23:40 AM
(MENAFN) A recent Bybit report has shed light on the current supply dynamics of Bitcoin, revealing that a mere nine months' worth of supply remains on trading platforms. This scarcity is primarily attributed to the impending Bitcoin halving, set to slash the currency's supply by 50 percent. Post-halving, the pressure on Bitcoin's supply is anticipated to escalate further, as indicated in the report's findings. The dwindling reserves on central trading platforms are now depleting at an accelerated pace.
With approximately 2 million bitcoins left in circulation, and assuming a daily influx of $500 million into exchange-traded funds (ETFs) for spot trading, an estimated 7,142 bitcoins would exit exchange reserves each day. This projection suggests that it would take a mere nine months to deplete all remaining reserves. Moreover, the report highlights the upcoming halving's significant impact on Bitcoin's scarcity, making it twice as rare as gold.
The concept of scarcity is encapsulated in the stock-to-flow ratio, calculated by dividing a commodity's circulating supply by its annual production. Prior to the next halving, Bitcoin boasts a stock-to-flow ratio of approximately 56, compared to gold's 60. Following the anticipated halving in April 2024, Bitcoin's ratio is expected to double to 112.
In response to these developments, institutional investors are taking proactive measures, recognizing the importance of preparing for the halving's ramifications. This trend has gained momentum, especially after the United States officially sanctioned the listing of Bitcoin exchange-traded funds on exchanges. The Bybit report underscores Bitcoin's growing appeal as the safest investment option, even among seasoned investors in the digital currency realm.
Furthermore, Bitcoin's price correlation with other cryptocurrencies has consistently remained high, positioning it as an attractive investment choice with the lowest beta coefficient. These factors collectively contribute to the increasing prominence of Bitcoin within institutional investment strategies, underscoring its resilience and potential for long-term value appreciation.
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