- Rising illiquid supply challenges Bitcoin’s traditional halving-driven price surge narrative.
- Bitcoin’s 2024 halving shows the worst post-event price performance in its history.
- Experts debate if halving still influences Bitcoin’s price amid growing illiquid supply.
Bitcoin’s halvings have traditionally been associated with price surges, fueled by the reduced miner rewards that create scarcity. However, recent analysis challenges this long-held belief. Experts argue that Bitcoin’s growing illiquid supply could disrupt the typical price predictions tied to halving events.
Jasper De Maere, Research Director at Outlier Ventures, spearheads this dissenting view. He questions the widely-held assumption that Bitcoin halvings automatically trigger price increases. De Maere emphasizes that while halvings decrease the creation of new Bitcoin, the existing supply is becoming increasingly illiquid as holders move their Bitcoin into long-term storage. This reduces market liquidity and may limit the price movements historically associated with halving events.
The crux of the argument lies in how this rising illiquid supply affects market dynamics. With more Bitcoin held in long-term wallets and less available for trading, traditional supply-demand models may no longer be applicable. De Maere suggests this shift could dampen the anticipated price surge that many expect post-halving.
Recent data supports this perspective. The 2024 Bitcoin halving is exhibiting the weakest price performance in the cryptocurrency’s history, with a decline of 8% in the 125 days following the event. This starkly contrasts with previous halvings, such as the one in 2016, where the price increased by 10%. De Maere notes that the shrinking block rewards now have a minimal impact on the market, as Bitcoin’s trading volume and liquidity have vastly expanded over the years.
Meanwhile, traditionalists maintain that the halving’s reduction of new Bitcoin entering circulation will continue to create scarcity, driving prices higher. They contend that despite the rising illiquid supply, the fundamental force of reduced supply will generate sufficient market pressure to push prices upward. In their view, the halving remains a pivotal event that determines Bitcoin’s value, regardless of how much is held in long-term storage.
The future of Bitcoin’s price remains uncertain. As the next halving approaches, the debate over the illiquid supply and its influence on market dynamics continues to shape predictions. With record-high illiquid supply levels, experts are divided on whether Bitcoin’s price will adhere to past patterns or deviate from tradition.
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