After Bitcoin's halving, market demand is five times the supply! Bitfinex analyst: Miner sell-off slows down, BTC continues to flow out

The recent Bitcoin halving has sparked speculation about its impact on the market, particularly regarding the reduction in block rewards and its potential to drive up Bitcoin prices. According to analysts at Bitfinex, the halving has significantly reduced the daily supply of Bitcoin, while demand remains robust.

Bitcoin Halving Impact: Supply Decrease vs. Investor Demand

Analysts suggest that the halving of rewards could decrease the nominal value of Bitcoin added to the supply each day to around $30 million. This amount, which includes supply from active and dormant addresses as well as miner sales, is only a fraction of the average daily demand for the US Bitcoin spot ETF. Despite occasional net outflows, the average daily net inflow into Bitcoin spot ETFs still surpasses $150 million, highlighting strong investor demand.

Pre-Halving Sell-Off: Miner Holdings Reach New Low

On the other hand, miner sell-offs may also slow down because miners or organizations responsible for mining Bitcoin have sold off most of their inventory in the months leading up to the halving, reducing the amount of BTC held by miners to a new low since early 2021. Data shows that in the six months before the halving, the amount of Bitcoin held by miner-related wallets decreased by more than 18,000.

Miners' holdings of BTC reached a new low since early 2021 Source: CoinMetrics

Bitcoin Outflows Signal Investor Confidence Amid Supply Reduction

Furthermore, on-chain data indicates a surge in Bitcoin outflows from exchanges to cold storage wallets, signaling investor confidence in Bitcoin's future price appreciation. Additionally, miner sell-offs, which typically contribute to market supply, have slowed down as miners had already liquidated much of their inventory in the months leading up to the halving. This reduction in supply from both investors and miners bodes well for potential price increases.

Bitfinex analysts also provided historical context, highlighting significant price surges following previous halvings:

• After the 2020 halving, Bitcoin's price surged nearly sevenfold in the following year.
• Previous halvings in 2016 and 2012 also resulted in substantial price increases.
• The most recent halving occurred amid a year of price growth, with Bitcoin reaching a peak of $73,666.

Overall, the combination of reduced daily supply and sustained demand suggests favorable conditions for Bitcoin price appreciation, echoing past trends observed after halving events.