Posted:
- Grayscale’s data suggested a positive view on Bitcoin as the halving approaches.
- Bitcoin ETFs and on-chain activity could offset the potential volatility post-halving.
Bitcoin [BTC] has seen a huge rally in recent days, inspiring optimism among holders and traders alike. However, there were some concerns about the upcoming halving and the impact it could have on BTC.
You don’t have to worry?
However, Grayscale Investments recently released data that suggests things could end well for BTC.
According to their released data, Bitcoin’s halving will take place around April 2024.
While Grayscale acknowledged the short-term revenue challenges for miners, it highlighted the positive fundamental changes surrounding this halving.
According to their data, miners have strategically positioned themselves to counter reduced block rewards by securing funds through equity/debt issuances and selling reserves, mitigating potential financial strains.
Despite these factors, traders should consider the possibility that many miners will sell their holdings to maintain profitability, which could put downward pressure on BTC.
The declining revenues faced by miners could also negatively impact the situation.
Source: Blockchain.com
Looking at the ecosystem
Another factor that could offset post-halving volatility could be increasing interest in Bitcoin’s ecosystem.
Recently, there has been an increase in on-chain activity on the Bitcoin network, especially with the advent of ordinal inscriptions.
The inscriptions have created more than 59 million Non-Fungible Tokens [NFT] collectibles, and have injected vitality into the BTC ecosystem.
This has resulted in significant transaction costs, which as of February 2024 exceeded $200 million.
The ongoing growth trend of on-chain activity is expected to continue, fueled by continued innovations and renewed developer interest in the Bitcoin blockchain.
The increase in activity and subsequent fees generated on the Bitcoin network could also help offset the selling pressure that Bitcoin miners may face in the future.
Source: Glassnode
The continued adoption of Bitcoin ETFs could help absorb selling pressure and reshape Bitcoin’s market structure by introducing stable demand, ultimately boosting price dynamics.
At the time of writing, BTC was trading at $48,204.27. The price was up 0.17% in the past 24 hours.
Read Bitcoin’s [BTC] Price forecast 2024-25
The rate at which BTC traded during this period had also decreased, indicating that the frequency at which BTC was traded had decreased.
Only time will tell how the addresses will behave after the halving.
Source: Santiment