Halving Hype: Separating Supply from Demand

The Bitcoin halving is a widely anticipated event in the crypto industry, often claimed to trigger bull cycles. However, this narrative may be oversimplified.

The halving occurs every 210,000 blocks, roughly four years, and reduces the block reward by half. In April 2024, this led to a subsidy of 3.125 BTC per block, with an annual inflation rate below 1%. This predictable event is not a surprise to participants, who anticipate the change years in advance.

According to efficient market theory, the supply component of the halving is already factored into expectations. The market may overreact or underreact, but it does not discover the cut on event day. New supply represents a small fraction of volume traded on exchanges, ETFs, and derivatives venues.