CoinEx Research’s latest report reveals that 2024 will be a crucial year for Bitcoin, as the approval of the Bitcoin ETF once again puts the spotlight on the upcoming Bitcoin halving event. This event is an integral part of Bitcoin’s protocol design, aimed at effectively controlling the mechanism through which new Bitcoins enter circulation. It is anticipated that Bitcoin’s halving will take place in April 2024, with the block count reaching 840,000 and block rewards decreasing from 6.25BTC to 3.125BTC per block.
The report from CoinEx Research further highlights that Bitcoin’s halving will result in an unprecedented drop in the annual inflation rate to below 1%. By comparing the annual inflation rates before and after the halving, with the current single block reward at 6.25BTC and daily production of approximately 900 blocks, the yearly addition of Bitcoins is calculated at 900 multiplied by 365. The current annual inflation rate stands at 1.67%. The daily production will be halved to 450 blocks following the halving, reducing the annual inflation rate to 0.83%. This shift implies that Bitcoin’s annual inflation rate will decrease from around 1.76% to approximately 0.83%, marking the first time it falls below 1%.
CoinEx Research: Bitcoin Set to Experience Its First Dip Below 1% in Annual Inflation Rate
The report emphasizes that historical evidence suggests a reduction in new block rewards during halving events leads to a slowing down of new Bitcoin generation, causing a significant increase in Bitcoin prices. Additionally, the reduction in supply combined with the foreseeable growth in demand contributes to a tightening of Bitcoin supply. This may result in an insufficient supply of Bitcoin in the market, leading to a price surge and encouraging long-term holders to sell. While the increase in Bitcoin prices may not occur immediately, relevant data indicates that Bitcoin prices tend to experience a noticeable rise after each halving event.
The report emphasizes that historical evidence suggests a reduction in new block rewards during halving events leads to a slowing down of new Bitcoin generation, causing a significant increase in Bitcoin prices. Additionally, the reduction in supply combined with the foreseeable growth in demand contributes to a tightening of Bitcoin supply. This may result in an insufficient supply of Bitcoin in the market, leading to a price surge and encouraging long-term holders to sell. While the increase in Bitcoin prices may not occur immediately, relevant data indicates that Bitcoin prices tend to experience a noticeable rise after each halving event.