Halvings cut the new supply of BTC issued to miners every 10 minutes by 50%. Halvings occur every 4 years. There was one in 2012, 2016, 2020 and one coming up in 2024. The current amount of BTC issued to miners is 900 BTC daily.
Why does this matter? Because miners sell BTC to cover expenses for mining. And this creates daily selling pressure on BTC.
But why would 900 BTC affect anything when the total supply of BTC is over 19 million? Specially considering miners don’t sell every bitcoin they earn.
I would argue that the 900 BTC should not be compared to the total supply but instead to the daily on chain volume. If most BTC is in cold storage or not being actively traded, it doesnt come into play when considering the market supply and demand on a daily basis. What matters more is how much BTC is being actively exchanged on chain. And that number is closer to 250,000 BTC on average per day.
So if miners are selling 75% of the 900 BTC they earn per day, that is 675 BTC being sold daily. That is 0.0027 of the daily average volume.
So what? Well that selling pressure is daily, so per week that selling pressure becomes 0.0189 of an average days volume. Per month its 0.081 and per year its 0.9855. Almost a whole days average volume of selling pressure. But is one days worth of volume out of 365 days in a year a lot?
Put another way, if miners sell 675 of the 900 BTC issued daily, that is $14 million in selling pressure at current prices. As price increases, that selling pressure increases. When BTC is at $60k, the selling pressure becomes $40 million daily. That means currently, $14 million worth of BTC must be purchased daily to keep a price level stable. And when BTC was at $60k, it meant $40 million had to be purchased daily just to prevent a price drop, let alone an increase.
So the amount of BTC issued per day looks minuscule by volume standards but when you look at the actual amount that must be purchased daily to maintain a given price, not even taking into account any other daily selling pressure, you can see that the halvings do matter.
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