Digital asset manager Grayscale predicts that the 2024 Bitcoin halving will play out differently than the past three, in a new report that highlights the market impact of U.S. spot Bitcoin ETFs.
In a report titled "2024 Halving: This Time It’s Actually Different," released Friday, Grayscale analysts point to Bitcoin ETFs providing a "new, steady demand source" that could counterbalance sell pressure from mining issuance.
While the report notes that Bitcoin's price has historically gone up after each halving, it also cautions that other cryptocurrencies with halving mechanisms, such as Litecoin, have not seen a similar price appreciation post-halving. The report's authors also highlight that post-halving Bitcoin price increases have also coincided with "significant macroeconomic events" such as the European debt crisis and the COVID-19 pandemic.
Bitcoin Halving Nears and BTC Miner CleanSpark Is Preparing for Lower Fees
CleanSpark Inc., a Nasdaq-listed Bitcoin mining company, announced yesterday that it signed agreements to purchase three Bitcoin mining facilities in Mississippi for $19.8 million in cash. The purchases are expected to expand CleanSpark's mining capacity by 2.4 exahashes per second (EH/s) once fully integrated. An exahash (abbreviated EH/s) is a measure of a Bitcoin mining machine's processing power. One exahash equals one quintillion (1,000,000,000,000,000,000) hash calculations per second. Bit...
The report points to "evidence that miners have long been preparing for the financial repercussions of the halving," such as fundraising and selling holdings onchain in late 2023. This, they suggest, means that miners are "well-positioned" ahead of the halving—and even if some miners exit the market, the hashrate decrease will lead to an adjustment in mining difficulty, ensuring the network remains stable.
The report's authors also flag the impact of Bitcoin ordinals inscriptions and ETF flows on Bitcoin's market structure. The former, they argue, serves as a bellwether for how miners will be incentivized to secure the network as block rewards decline, with ordinal activity representing "a new path toward sustaining network security through increased transaction fees."
Grayscale Is Sending Bitcoin to Coinbase in $500 Million Clips—Here’s Why
Is Grayscale dumping billions of dollars worth of Bitcoin? Blame it on the ETFs. Bitcoin has taken a hard hit this week, falling by over 14%, despite the historic approval of spot crypto exchange-traded funds (ETFs) just over seven days ago. And it appears that Grayscale, the digital asset manager owned by crypto behemoth Digital Currency Group, may have a lot to do with that. Investors in Grayscale’s Bitcoin Trust (GBTC), recently converted to a Bitcoin ETF following SEC approval, have been exi...
Bitcoin ETFs, meanwhile, saw inflows of $1.5 billion in just a fortnight after their launch, "absorbing nearly the equivalent of three months' worth of potential post-halving sell pressure." While Grayscale's analysts don't expect that level of "pent up demand" to be sustained, they note that a steady state of net inflows to ETFs could counterbalance sell pressure from mining issuance, while higher levels of inflows around $10 million a day could even "mirror the effects of another halving."
One Bitcoin ETF that hasn't enjoyed net inflows is Grayscale's own GBTC, which since its conversion into a spot Bitcoin ETF saw billions of dollars in outflows as holders took the opportunity to cash out. In recent weeks those outflows appear to have slowed, though funds continue to flow from GBTC into rival Bitcoin ETFs.
Edited by Stacy Elliott.
