- Bitcoin (BTC) is about to hit a new level of scarcity when its fourth halving kicks off.
- A supply crunch could be on its way as growing institutional interest is leading to the aggressive hoarding of the digital asset, thereby, driving up demand.
- The 10 spot Bitcoin exchange-traded fund (ETF) issuers in the US already control over 4% of BTC float.
The Bitcoin Halving
With only less than 3,000 blocks to go until the halving triggers at the pre-determined 840,000th block height, the monumental affair in the Bitcoin ecosystem is estimated to take place sometime on April 20 this year. In a nutshell, the event is one of the key deflationary features of BTC that cuts its block rewards at every 210,000 blocks mined in approximately four years.
The fourth epoch of the halving is set to cut Bitcoin mining rewards from the existing 6.25 BTC per block to 3.125 BTC. To date, there are already 19.67 million BTC in circulation out of its finite supply of 21 million coins. Doing the simple math, that only leaves 1.33 million BTC from today up to the final halving scheduled in 2140.
Incoming Supply Crunch
Simply put, a ‘supply crunch’ is a time when the supply of a product is overwhelmed by demand. In the case of Bitcoin, the regulatory approval of spot exchange-traded funds (ETFs) in the US has become the key catalyst for its wider institutional adoption.
As of the March 29 data, the 10 spot Bitcoin ETF issuers in the US already own 849,276 BTC, equivalent to $59.45 billion based on the prevailing price of the digital asset today. Interestingly, this makes up over 4% of all Bitcoin’s max supply.
This is further magnified by other financial entities that are hell-bent on taking a significant slice of BTC before prices totally blow off the roof like Michael Saylor’s MicroStrategy. Notably, the firm that has rebranded itself as a Bitcoin development company already possesses more than 1% of the coins’ overall float with a total supply of 214,246 BTC.
At this rate, their accumulation is showing no signs of slowing down, and this could ultimately lead to higher demand as the daily Bitcoin production gets slashed from an average of 900 BTC to post-halving’s 450 BTC amidst the aggressive buying spree of institutional as well as retail investors.
BlackRock Leads the Charge
BlackRock remains the leader among the spot Bitcoin ETF issuers in the US. According to its public disclosure, it presently holds over 252,000 BTC valued at $17.32 billion.
On Friday, iShares Bitcoin Trust (IBIT) spot Bitcoin ETF closed at $40.30 per share. It displayed $95.1 million in net inflows during that time amid Grayscale Bitcoin Trust’s (GBTC) 104.9 net outflows that dragged the net inflows of all 10 spot Bitcoin ETFs in the US to $182.8 million.
Bitcoin Now
As of this writing at 3:00 PM UTC on Sunday, Bitcoin is trading at $70,000 with a slight nudge of 0.49% in its price. Meanwhile, transaction volume decreased by 11% as only $18.05 billion worth of BTC moved between addresses as prices swung from a $69,601.07 low to a $70,746.34 high.