Kadan Stadelmann: The Fourth Bitcoin Halving Supply Shock Could Change Bitcoin Market



Bitcoin halvings are widely anticipated for their effect on Bitcoin’s price. Although the final bitcoin is not expected to be mined until the year 2040, nearly 94% of the 21 million bitcoins ever to exist have been mined already. By the time of the fourth Bitcoin halving, due to take place in April 2024, 97% of all bitcoin will have been mined. 

The halving happens approximately every four years (or every 210,000 blocks) to control the rate at which new bitcoins are created. By reducing the block reward, which happens every ten minutes, the total supply of bitcoins is gradually limited.

When Bitcoin first launched in 2009, the Bitcoin block reward was 50 Bitcoin. In 2012, the block reward dropped to 25 bitcoins. The block rewards have since dropped to 6.25. The forthcoming Bitcoin halving will drop the Bitcoin block reward down to 3.125 bitcoins per block reward. 

In essence, halvings represent supply shocks built into the Bitcoin algorithm, and the fourth Bitcoin halving could have the biggest effects on the Bitcoin market since the first Bitcoin halving due to market conditions, such as a low available supply of bitcoin and other macroeconomic conditions, such as institutional adoption and pending Bitcoin ETFS. 

Bitcoin Active Addresses

Bitcoin active address charts illustrate BTC movement between wallets, displaying two distinct peaks in Bitcoin’s recent history, the first of which happened in 2018 during the 2016-2020 cycle. Another happened in 2021 during the most recent halving cycle, whereafter Bitcoin began to trade in a volatile fashion until the uptrend of the past three months. 

The following charts display Bitcoin addresses with more than .01 and 0.1 bitcoins. The orange line on the chart shows active addresses, with both charts showing an unrelenting increase in active wallets, when presumably throughout the course of 2022 and 2023 people began to acquire bitcoin at lower prices. 

The below charts display those with more than one bitcoin and 10 bitcoins in each wallet, both showing recent increases. 

The following charts cover the whales more or less, with balances containing more than ten bitcoins and 100 bitcoins. The stagnation in the latter group could be due to the sheer amount of money it takes to enter the group and some profit taking, etc. 

Glassnode Sees Bitcoin Available Supply At Historic Lows 

Meanwhile, Glassnode has found that the ‘available supply’ of Bitcoin is at historic lows due to holders moving coins out of exchanges into cold storage and long-term investor wallets.

Actively Traded Supply
Bitcoin: Actively Traded Supply

Short-Term Holder Supply, which is the supply most likely to be spent, shows that only 5-10% of the circulating supply gets traded actively. 

Short Term Holder Supply and Balances on Exchanges
Short-Term Holder Supply and Exchange Balances

Glassnode classifies wallets into Illiquid, Liquid, and Highly Liquid categories. Its findings demonstrate that coins have been sent from exchanges to illiquid wallets in a trend dating back to March 2020. 

Liquid and Illiquid Supply

What To Expect In The Months Ahead Of The Fourth Bitcoin Halving 

After each halving cycle in the past, the Bitcoin price has increased. At the current price of $38,400, Bitcoin is more than four times its price at the time of the third halving. The Bitcoin halving prices plus 150 days chart shows the price 150 days after the halving date. The price on the first halving date in 2012 was $12.35. 150 days later, the Bitcoin price was $127–a 928% increase. The price was 17% higher 150 days after the 2016 halving and 24% higher after the 2020 Bitcoin halving. 

The average of the three cases suggest bitcoin could go to $113,000 after the fourth bitcoin halving. If we remove 2012, the numbers would wind up at a perhaps more reasonable 20% increase in the price of Bitcoin 150 days after the fourth halving. Assuming that Bitcoin is $35,000 on the having date, Bitcoin would land at $42,000. 

With only 40% of existing Bitcoin being traded, and the other 60% stored in long-term wallets, Bitcoin could be in for an unprecedented supply crunch. Considering Bitcoin’s ongoing supply dynamics, it’s reasonable to presume that the upcoming halving could have dramatic effects on the market and especially price, looking more like the 2012 event than more recent halvings.

Kadan Stadelmann

Kadan Stadelmann is a blockchain developer, operations security expert and Komodo Platform’s chief technology officer. His experience ranges from working in operations security in the government sector and launching technology startups to application development and cryptography. Kadan started his journey into blockchain technology in 2011 and joined the Komodo team in 2016.