Why Grayscale says this one’s different

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The count­down to Bitcoin’s high­ly antic­i­pat­ed halv­ing event is on, with few­er than 10,000 blocks left as of Feb. 12.

Accord­ing to the Bit­coin Halv­ing Clock, approx­i­mate­ly 9,843 blocks remain before the event, which is esti­mat­ed to occur by April 17.

The halv­ing event is sig­nif­i­cant for the cryp­to indus­try because it enhances Bitcoin’s scarci­ty by reduc­ing min­er rewards. Cryp­toSlate Insight report­ed that the event would slash the num­ber of BTC pro­duced dai­ly by min­ers to 450 BTC from 900 BTC.

His­tor­i­cal­ly, BTC halv­ing has usu­al­ly been fol­lowed by an increased dif­fi­cul­ty in min­ing the top cryp­to asset and a bull­ish price movement.

Bitcoin upcoming halving is ‘different’

Cryp­to asset man­age­ment firm Grayscale said the impend­ing halv­ing event car­ries dis­tinct impli­ca­tions com­pared to its pre­de­ces­sors due to the notable surge in BTC’s util­i­ty over the past year.

“Despite min­er rev­enue chal­lenges in the short term, fun­da­men­tal onchain activ­i­ty and pos­i­tive mar­ket struc­ture updates make this halv­ing dif­fer­ent on a fun­da­men­tal lev­el,” Grayscale wrote.

Bitcoin Halving
Bit­coin Halv­ing Impact on Issuance. (Source: Grayscale)

Accord­ing to the firm, the recent intro­duc­tion of Bit­coin Exchange-Trad­ed Funds (ETFs) presents a sta­ble demand out­let that could coun­ter­act the down­ward pres­sure from min­ing issuance.

It said:

“ETFs, in gen­er­al, cre­ate access to Bit­coin expo­sure to a greater net­work of investors, finan­cial advi­sors, and cap­i­tal mar­ket allo­ca­tors, which in time could lead to an increase in main­stream adoption.”

Fur­ther­more, Grayscale high­light­ed the sig­nif­i­cance of Non-Fun­gi­ble tokens (NFTs)-like ordi­nal inscrip­tions in the BTC ecosys­tem. The firm said these assets “present a new path toward sus­tain­ing net­work secu­ri­ty through increased trans­ac­tion fees.”

Beyond that, the emer­gence of ordi­nal inscrip­tions has invig­o­rat­ed on-chain activ­i­ty, yield­ing over $200 mil­lion in trans­ac­tion fees for min­ers as of Feb­ru­ary 2024. This trend is antic­i­pat­ed to endure, buoyed by renewed devel­op­er engage­ment and ongo­ing inno­va­tions with­in the blockchain.

In addi­tion, Grayscale not­ed that min­ers have been proac­tive­ly prepar­ing for the halving’s finan­cial impli­ca­tions by liq­ui­dat­ing their BTC since late 2023. This proac­tive stance posi­tions them favor­ably ahead of the halv­ing event.

Even if some min­ers were to exit the net­work, Grayscale said the sub­se­quent decrease in hash rate would prompt an adjust­ment in min­ing dif­fi­cul­ty, safe­guard­ing net­work stability.

“While [BTC] has long been her­ald­ed as dig­i­tal gold, recent devel­op­ments sug­gest that [it] is evolv­ing into some­thing even more sig­nif­i­cant,” Grayscale concluded.

BTC Price & Mar­ket Data

At the time of press, Bit­coin is ranked #1 by mar­ket cap and the BTC price is up 3.52% over the past 24 hours. BTC has a mar­ket cap­i­tal­iza­tion of $980.27 bil­lion with a 24-hour trad­ing vol­ume of $30.81 bil­lion. Learn more about BTC ›

BTCUSD Chart by TradingView

Market summary

At the time of press, the glob­al cryp­tocur­ren­cy mar­ket is val­ued at at $1.86 tril­lion with a 24-hour vol­ume of $62.28 bil­lion. Bit­coin dom­i­nance is cur­rent­ly at 52.66%. Learn more ›

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