Bitcoin’s halvings, which reduce the production of new Bitcoins, have a significant impact on the cryptocurrency’s supply dynamics. Pantera’s recent newsletter highlighted how each halving has successively constricted the new supply percentage of outstanding Bitcoin. The first halving led to a 17% reduction, setting a trend.
The 2016 halving saw a one-third reduction compared to the previous halving, while the 2020 reduction rate escalated to 43%. Pantera predicts that the 2024 halving will result in an almost 50% cutback due to the substantial number of Bitcoins already in circulation.
These sequential halvings emphasize Bitcoin’s deflationary nature and highlight its scarcity, a critical aspect driving its value. As the reduction rate approaches the 50% mark, the market is poised to experience increased scarcity, potentially impacting price dynamics.
Pantera’s historical analysis shows similar trends, with the percentage increase in the previous halving rallies at 32% in 2016 and 23% in 2020. They project a 47% surge leading up to the 2024 halving, possibly positioning Bitcoin around $35,000 at the time of the upcoming halving.
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