“Bitcoin is ready for its next phase of growth”: CoinMetrics

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Key facts: Miners will need to do their work more efficiently and sustainably, says CoinMetrics New technological developments in Bitcoin will boost the BTC market. CoinMetrics, an on-chain analysis company, recently published a report reflecting bullish expectations for bitcoin (BTC) after the halving. “The convergence of this supply-side event and strong demand drivers suggests that bitcoin is poised for its next phase of growth,” the report states. The company explains that Each halving is a fundamental moment in the life cycle of bitcoin, since it reduces the issuance of the digital currency by 50%. In this sense, the supply that is launched on the market decreases, leading to an increase in the price of the asset. It should be noted that this is not instantaneous, as miners can flood the market by selling old holdings.

“Amid the current environment of macroeconomic uncertainty, with persistent inflation and looming federal funds rate cuts, the ripple effects of the upcoming election cycle, geopolitical tensions and record debt levels, one event stands out. as a beacon of certainty: the fourth bitcoin halving” CoinMetrics, provider of on-chain data and market analysis.

The bitcoin halving, which occurs automatically every approximately four years, will occur for the fourth time in history this Saturday, April 20. CoinMetrics maintains that, 15 years after the coin's launch, this is a fundamental event for its economic policy and value proposition on the global stage. Likewise, it indicates that the halving challenges miners to carry out their work in a more efficient and sustainable way to remain profitable. The analysis company highlights that the bitcoin market tends to move in four-year cycles. As shown in the following graph, the currency has appreciated significantly the year following each halving. This pattern suggests promising gains for 2024-2025 if repeated.

Performance of the price of bitcoin before each halving. Source: CoinMetrics.

ETFs reflect “a huge role” for the future rise of bitcoin

CoinMetrics emphasizes that, while the halving plays a key factor in supply, demand plays a crucial role in driving value. He maintains that each bitcoin bull cycle has had different aspects that motivated the buying force, which is also seen in the current one. He specifies that the launch of BTC exchange-traded funds (ETFs) launched in the United States this year has catalyzed a substantial source of new demand. In fact, it indicates that has accelerated the price rise to a new all-time high before the halving, which had never happened before. “The role of ETF-induced demand and subsequent attention has given rise to a slightly different dynamic and promises to play an outsized role in the future,” he says. For the company, capital inflows into bitcoin ETFs in the United States along with those recently approved in Hong Kong and other sources of demand, will help more effectively absorb the pressure of forced selling and reduced supply. Plus, they can drive price action, he notes. Broader macroeconomic and liquidity changes, regulations, growth in global digital asset adoption and speculation are other factors it believes could provide a boost in demand. This report is presented while, as BitcoinDynamic reported, the escalation of the conflict in Israel led markets in general, including bitcoin, to decline this week.