Crypto Analyst Nicholas Merten Believes Bitcoin Halving Won’t Trigger Bull Market
Crypto analyst Nicholas Merten has expressed a different viewpoint from many traders and analysts regarding the upcoming Bitcoin halving event in 2024. Merten argues that this halving will not ignite a significant rally as previous ones did due to its diminishing impact on new supply. Bitcoin halvings occur every four years, cutting BTC mining rewards in half and reducing the amount of new supply entering the market. However, Merten believes that the reduction in miner rewards from 6.25 Bitcoin per block to 3.125 Bitcoin per block is relatively small compared to Bitcoin’s total market cap, making it unlikely to spark a major rally.
The Impact of the Halving on Bitcoin Supply
Merten explains that while the halving technically reduces the inflation rate by half, its real impact diminishes over time. He points out that Bitcoin’s diminishing returns are a result of this phenomenon. The upcoming halving will reduce the number of newly minted Bitcoins by 164,250 per year, which amounts to around $4.4 billion at current market rates. However, when considering Bitcoin’s market cap of $523 billion, this reduction is relatively insignificant.
Market Size and Sell Side Pressure
Merten further breaks down the reduction in supply on a daily basis, stating that it would equate to 450 fewer Bitcoins sold each day or approximately $12 million less in potential sell side pressure. While these numbers may seem significant, they become less optimistic when compared to Bitcoin’s market valuation and size. With a market cap of over half a trillion dollars, the reduction in supply represents only a small fraction of Bitcoin’s overall value.
Conclusion: Will the Halving Trigger a Bull Market?
Merten’s analysis suggests that the upcoming Bitcoin halving is unlikely to be a bullish catalyst for the market. He believes that the reduction in supply resulting from the halving is not significant enough to spark a major rally. While the halving event may have had a more substantial impact in the past, Merten argues that its diminishing returns over time make it less influential in driving Bitcoin’s price upward.
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