The Impact of Bitcoin ETFs on the Halving
The upcoming Bitcoin (BTC) halving is likely to have a different outcome this time around due to various external factors, according to Grayscale. The company believes that the introduction of Bitcoin ETFs may influence the price of Bitcoin as if it were a second halving within a single year. Grayscale explains that if there are $10 million of daily net inflows into ETF products, which can be divided by the daily amount of issued Bitcoin ($19 million), the effect is similar to another halving. Since their launch, Bitcoin ETFs have accumulated $2.6 billion of inflows.
Historical Bull Markets and Macro Events
Grayscale notes that past halvings have been followed by bullish markets and new all-time highs in the following year. However, attributing these rallies solely to Bitcoin’s declining supply inflation may oversimplify history. The company suggests that significant macroeconomic events, such as the COVID-19 pandemic and government stimulus measures in 2020, have also played a role in these periods of growth.
The Impact on Miners and Developers
In addition to its effect on price, halving events often result in less efficient players in the mining industry being forced out due to reduced rewards. Grayscale warns that miners may find themselves in a difficult position as the block subsidy falls and network hashrate rises. However, there is a silver lining for miners this year: Ordinals. These have driven up network activity, transaction fees, and miner revenue independent of the fixed block reward and halving schedule. Ordinals have also inspired new innovations on Bitcoin, addressing scalability issues with technologies like rollups that bridge Bitcoin to more scalable blockchains.
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