ETF vs Halving - Which will have the most impact on Bitcoin?

Which event will ultimately have the most impact on the value of bitcoin? ETFs or the “Halving”?

Bitcoin ETF vs Halving

Bitcoin ETFs are currently generating demand for about 14,000 BTC per business day. It’s important to point this out to remember that ETFs do not trade on weekends.

Given that ETFs have absorbed 95,000 BTC since Thursday, January 11th, this gives us an average of approximately 10,000 bitcoins per day. This still represents a little more than ten times the number of BTC mined every day (900 bitcoins).

This is huge. This demand is ten times greater than the supply which, however, is currently distorted by the sales from the GBTC ETF. The exodus of clients from Grayscale is causing bitcoin sales that are currently offsetting the purchases of BTC by the new ETFs.

For more information on this topic, don’t miss our article: When will the Bull Run resume? We explain why bitcoin is stagnating and how long this might last.

Another event that will soon impact the supply of bitcoin is the “Halving”. In May, the reward obtained by miners will be cut in half. Since 2023, miners receive 6.25 bitcoins per transaction block. Soon it will be 3.125 BTC, or 450 BTC per day.

So, while ETFs represent a tenfold increase in demand over daily creation, the “Halving” is just a factor of two.

This leads Blockstream CEO Adam Back to say that the halving will have a much smaller impact than ETFs on the price of bitcoin:

yep. and implication i think once people calm down is a pre-halving run up, as the ETF inflows are 30x larger than the halving effect. and a lot of tradfi led by broker sentiment are momentum buyers: price goes up due to smart-money, they say buy, creates news, they buy more etc.

— Adam Back (@adam3us) January 21, 2024

However, while this analysis is defensible in the short term, it’s important to remember that the halving is permanent. Not to mention that it repeats every four years.

Conversely, the bitcoin purchases facilitated by ETFs will not last forever. Hopefully, it will be later rather than sooner, but this demand for 10,000 bitcoins/day will eventually level off. In contrast, the reduction in supply through the halving is permanent.

The green lights are on and we are probably living through the last weeks of stagnation before the Bull Run picks up again. A new all-time high in sight before the end of the year?