According to a recent report by crypto exchange Bitfinex, Bitcoin miners likely offloaded their holdings ahead of the halving, potentially preventing a steeper price drop during the event.
Bitfinex cites data showing a significant decrease in miner Bitcoin transfers to exchanges in March, compared to February. This suggests miners may have been cashing out or using their Bitcoin as collateral for upgrades before the halving cut their rewards in half.
Halving Cuts Miner Revenue, But History Suggests Rebound
Bitcoin halving typically reduce miner income. This time around, the reward per mined block dropped to 3.125 BTC, which is roughly $208,000 at current prices. In the past, such events have triggered miner selling sprees to maximize profits before the income reduction, leading to short-term price volatility.
However, Bitfinex believes these negative effects are usually temporary. Historically, rising Bitcoin prices and expanded mining operations follow halvings to compensate for lower rewards.
US Bitcoin ETFs May Have Further Dampened Price Impact
The emergence of spot Bitcoin ETFs in the United States might have also played a role in mitigating the halving’s price impact. Bitfinex suggests these investment vehicles, with their large-scale inflows, can significantly influence market sentiment and potentially overshadow traditional supply and demand dynamics.
The combination of ETF demand and a reduced supply due to the halving could lead to further Bitcoin price appreciation, according to the report. While ETF inflows have slowed since their launch, Bitfinex highlights continued strong investor interest.
ETF Demand Potentially Exceeds New Bitcoin Creation
The report points out that the amount of Bitcoin acquired by ETF issuers has surpassed the daily creation of new Bitcoins since their launch. This trend, coupled with the halving’s supply reduction, could significantly tighten Bitcoin’s availability in the market.
Bitfinex estimates that post-halving, daily Bitcoin supply could be as low as $30 million, while ETF inflows average over $150 million daily. This suggests ETF demand might continue to outpace new Bitcoin creation in the coming months.
