Bitcoin shortages after a bearish result in a persistent bull run

Bitcoin is approaching another milestone – its scheduled halving event. The reward miners receive for confirming transactions is programmatically reduced.

The halving is a significant event that has historically impacted the value of Bitcoin and the broader cryptocurrency market.

Increasing scarcity meets growing demand.

The halving happens every four years and is part of Bitcoin's special monetary policy. It mimics the scarcity and value of precious metals like gold.

“Over the past various cycles, we've seen demand for Bitcoin as opposed to the supply being the same. So, if you look at it from a macroeconomic perspective, more demand and the same supply will drive the price up,” Shiraz Ahmed, Managing Partner of STORM Partners, told BeinCrypto.

Of course, halving will reduce the rate at which new BTC is created, balancing the supply. This has typically led to bullishness among investors. Essentially, the reduced flow of new coins strengthens competition for existing ones.

Read more: Bitcoin Half Countdown

The upcoming halving could further exacerbate this trend as large institutional investors' participation in Bitcoin Exchange-Traded Funds (ETFs) increases.

“If you look at Bitcoin ETFs in the United States, they're gathering a lot of interest from players like pension funds and smaller institutional players. They're buying a lot of bitcoin, sometimes as much as possible every day. Halving bitcoin production will make it difficult for them to fill the demand.” Ahmed added.

Likewise, countries such as El Salvador have begun to redistribute part of their treasury assets into Bitcoin. This hints at the wider acceptance and normalization of Bitcoin as a mainstream financial asset. In addition, government involvement could increase demand pressures after the halving, as noted by STORM analysts.

Bitcoin stable bull run after decline

This large purchase may stabilize Bitcoin's price volatility. “I don't think we're going to see drama swing up or down. However, it will be very persistent. It will continue to grow,” Ahmed said, pointing to his belief in the maturity of the market and the volatility of bitcoin.

Read more: What Happened in the Last Half of Bitcoin? Predictions for 2024

While some market participants use halvings to predict Bitcoin's price movements and trading strategies, they also recognize that it is time to reflect on Bitcoin's technological and regulatory developments. Many jurisdictions have developed regulatory frameworks that are more favorable to Bitcoin than other speculative cryptocurrency assets, which bodes well for its mainstream adoption.

For this reason, see why Bitcoin is not a cryptocurrency.

“I don't believe Bitcoin should be in the league of other cryptocurrencies. Bitcoin is its own beast, and it's very different from Ethereum and the rest. None of them can compete with him. Bitcoin has 52% market share today. I strongly believe that after graduating from the “cryptocurrency school” it will be a real asset to trade with other commodities like gold, silver, copper and so on,” concluded Ahmed.

Looking forward, Bitcoin's total supply limit — only 21 million coins can be mined — raises interesting economic questions about what will happen when all the coins are minted. This shortage could lead to significant changes in Bitcoin's role in the financial and technology sectors.