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gold bitcoin during halving on a bed of gold bars
April 22, 2024

Bitcoin Secures Fourth Halving Sending BTC Scarcity Above Gold

April 22, 2024

At a block height of 840,000, Bitcoin celebrated its fourth halving event this weekend, marking one of the industry’s greatest-ever milestones.

Bitcoin’s scarcity surpasses that of gold following the halving, signaling a paradigm shift in the digital asset’s store of value proposition. 

In a notable technological advancement, the unveiling of Runes introduced fungible tokens to the Bitcoin blockchain and, finally, investor sentiment received a last-minute boost as Bitcoin ETF inflows turned net positive on Friday.

As Bitcoin enthusiasts worldwide revel in the aftermath of the much-anticipated fourth halving, it’s time to dive in.

Bitcoin’s fourth halving is celebrated

On Saturday, Bitcoin marked one of its most important milestones with the completion of its fourth halving event.

This is an event that has been hotly anticipated by the cryptocurrency community which is reflected by all-time highs in Google Search results for the term ‘Bitcoin halving’. 

Worldwide Google search results for the term Bitcoin halving
Worldwide Google search results for the term Bitcoin halving



With the creation of its 840,000th block, the world’s leading blockchain has once again halved its mining rewards, reducing them from 6.25 BTC per mined block to 3.125 BTC.

Although many expected either an instant price pump or price dump, the halving has been met with a moderate price increase with Bitcoin trading at $65,000 at the time of writing.

The halving is a process that is baked into Bitcoin’s underlying code and occurs approximately every four years or after every 210,000 blocks mined. 

This mechanism, integrated into the code by Bitcoin’s founder, Satoshi Nakamoto, was added so that BTC’s inflationary supply could be regulated.

By halving mining rewards, Bitcoin’s protocol effectively slows down the rate at which new coins are introduced into circulation, ultimately contributing to its deflationary nature.

The latest halving event is the fourth in the sequence with previous halvings occurring in 2012, 2016, and 2020. Each resulted in a significant reduction in mining rewards over time. 

Bitcoin block rewards with time
Bitcoin block rewards with time



Looking ahead into the future, halving cycles are expected to continue until roughly 2140, by which time all 21 million bitcoins will have been mined, cementing Bitcoin’s status as a finite asset.

As a result of the decrease in mining rewards, leading Bitcoin miners have been making strategic moves in anticipation of the event. 

While short-term price volatility may ensue, there remains widespread optimism regarding Bitcoin’s long-term potential. 

In particular, Billionaire investor, Tim Draper, spoke with CoinTelegraph during the week and outlined his continued bullish stance.

Draper foresees Bitcoin’s price surging to “$250,000 or more” in the wake of the halving, citing the reduction in supply and sustained demand as key drivers of upward price movement.

However, there are some in the community, such as Herbert Sim, also known as “Bitcoin Man,” who caution against placing undue emphasis solely on the halving event when analyzing Bitcoin’s price dynamics. 

He suggests that factors such as the recent approval of a Bitcoin ETF in Hong Kong and potential institutional adoption in China could also exert significant influence on price movements.

Bitcoin becomes more scarce than gold

According to Ecoinometrics, the onset of Bitcoin’s latest halving has now resulted in its scarcity outpacing that of gold. 

While the stock-to-flow model popularized by PlanB may have lost some of its spotlight since 2020, it can still be used to compare it against one of the world’s most precious metals.

The stock-to-flow ratio compares the amount of Bitcoin in circulation to the new Bitcoins generated through mining annually.

Although not as accurate, the same model is often applied to gold by using the amount of gold in circulation against the best estimates for the amount mined annually. 

Throughout history, gold has been the benchmark for scarcity, boasting an average stock-to-flow ratio of approximately 66 over the last 100 years, with variations between 45 and 85 depending on the year.

During Bitcoin’s third halving event in 2020, its stock-to-flow ratio dropped to 56, which was just below that of the precious metal.

However, after Bitcoin’s fourth halving on the weekend, the ratio is poised to double, catapulting Bitcoin into a realm of unprecedented scarcity.

According to Ecoinometrics best estimates, the stock-to-flow ratio for the world’s leading cryptocurrency could jump to 120 and this would mean BTC becomes twice as scarce as gold.

Stock-to-flow ratio of Bitcoin vs Gold
Stock-to-flow ratio of Bitcoin vs Gold



New technology brings fungible tokens to Bitcoin

Coupled with Bitcoin’s halving, a brand new technology has been unveiled that allows for the creation of fungible tokens on the Bitcoin blockchain.

The highly anticipated release on Runes, spearheaded by renowned Bitcoin architect Casey Rodamor, marks a significant milestone in blockchain innovation. 

Whereas other blockchains like Ethereum and Solana offer smart contracts and, therefore, enhanced functionality, for the majority of its existence the Bitcoin blockchain has been viewed as a payment protocol. 

It can transfer wealth from one person to another but nothing more.

However, new protocols such as Ordinals and the BRC-20 token standard have changed the game over the last 12 months.

Ordinals revolutionized the concept of inscribing unique data onto individual satoshis, the smallest denomination of Bitcoin, and BRC-20 was one of the first token standards that allowed fungible tokens to be traded on the Bitcoin blockchain.

However, Runes aims to take fungible token creation on Bitcoin one step further.

Proposed by Casey Rodamor, Runes offers a new way for developers to mint tokens with fungible properties, akin to the likes of DOGE and SHIBA that we have witnessed rise to fame on other blockchains.

Unlike BRC-20’s, Runes stores messages in the output of a Bitcoin transaction which helps to improve efficiency due to the low on-chain footprint and it has already captured vast attention from the Bitcoin ecosystem.

Although set to debut on the date of the Bitcoin halving, a plethora of Runes projects had already begun their journey, including notable contenders such as DOG•DOG•DOG•DOG•DOG, MEME•ECONOMICS, SHORT•THE•WORLD, and PEPE•WIT•HONKERS.

Much like Ordinals in 2023, the unveiling of Runes has ignited a frenzy of activity, propelling transaction fees to unprecedented heights as users rush to partake in the creation of new tokens – but remember, you still pay low fees when you buy at Xcoins thanks to batching!

Bitcoin average transaction fees over the last 3 months
Bitcoin average transaction fees over the last 3 months



Bitcoin ETF inflows turn net positive over halving excitement

As anticipation surrounding Bitcoin’s halving built on Friday, the US-based Bitcoin Spot ETF market witnessed a notable shift as net inflows turned positive.

The reversal, which was warmly welcomed by crypto investors, came after a continuous five-day drain that started on April 12th.

Bitcoin ETF table flows over the last two weeks (US$m)
Bitcoin ETF table flows over the last two weeks (US$m)



Data released by Farside indicates that between April 12 and 18, the US Bitcoin ETF ecosystem experienced outflows totaling $319 million.

Grayscale’s GBTC played a significant role in these outflows, shedding over $623 million worth of BTC since April 12th. 

However, the narrative shifted on Friday, with five out of the 10 approved ETFs recording positive inflows that overshadowed outflows from GBTC. 

The influx totaled $59.7 million and injected fresh capital into the market.

Offsetting the cumulative outflows of $45.8 million from GBTC, Fidelity’s FBTC ETF attracted $54.8 million on Friday just before the commencement of the Bitcoin halving event. 

Other notable contributors to the inflows included Bitwise’s BITB with $4.9 million, ARK 21Shares’s ARKB with $12.5 million, Invesco Galaxy with $3.9 million, and Franklin with $1.9 million.

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