There will soon be a fourth Bitcoin halving, bringing the supply down to 3.125 BTC per block. This recurring event, which occurs every four years, highlights the core allure of Bitcoin—its limited supply of 21 million coins. The demand and belief in Bitcoin as a better form of money are mostly driven by the steady decrease in supply. Furthermore, the halving triggers a dramatic change in miner incentives, as they become more dependent on transaction fee income from users executing on-chain Bitcoin transactions rather than newly created coins.
In the past, Bitcoin's price has increased in tandem with halvings, lessening the effect of lower miner subsidies. Because miners must pay with fiat money, a higher price for bitcoin insulates income. Recent market cycles, however, indicate that this presumption might not always be true—especially now that the inflation rate is below 1%. If the subsequent cycle is identical to the previous one, this halving may have a detrimental impact on current miners.
Because of halvings, miners are depending more and more on transaction fee income. Prices must double every halving, or fees must increase, for sustainability. It is risky to anticipate a price guarantee of double every four years. The mempool has been greatly affected by BRC-20 tokens and inscriptions, which have increased fees from 0.1–0.2 BTC each block to a variable average of 1-2 BTC, frequently jumping higher.
This Time's Novel Factor
You are not Signed in