Bitcoin will be twice as rare as gold after mining: ByBit

Bitcoin (BTC) becomes scarcer after each halving, but the next event in the next four days will make the digital asset twice as rare as gold, according to analysts at leading crypto exchange BayBit.

BTC will face a supply crunch after the event as reserves on all centralized exchanges could be consumed within nine months, according to a report on what to expect before and after the Bitcoin halving.

Twice as rare as gold

Bibit said that Bitcoin's stock-to-flow (S2F) model proves the claim because the measurement shows that BTC becomes less valuable than gold after each halving. The S2F ratio is calculated by dividing the product supply by the annual production to obtain a measure of scarcity.

As of this writing, Bitcoin's S2F ratio is hovering around 56, while Gold's is around 60. After the reduction, the Bitcoin ratio is expected to double to 112.

A halving will reduce the supply by reducing BTC production, and a supply glut may be inevitable. Bitcoin is seeing the first signs of a short squeeze, which will worsen after the halving.

The supply of BTC for spot Bitcoin exchange-traded funds (ETFs) usually comes from a central exchange, as investors realize their profitable positions and miners sell their block rewards. As mining rewards decrease and investors HODL their assets in cold storage or decentralized wallets, miners will refrain from selling as quickly, and sell-side supply flowing into exchanges will decrease.

Complex cycle

They currently have a centralized foreign exchange reserve of about two million bitcoins. Assuming that Bitcoin ETFs see a daily flow of $500 million, that leaves a daily currency reserve of around 7,142 BTC, which shows that the reserve will only last nine months after the reduction.

“Given this, it's not surprising that before Bitcoin's price halves, or after, a supply crunch will bring the price to another new record,” Bybit said.

Although the halving is known to trigger a spike in Bitcoin prices, analysts see this cycle as complex and are uncertain about the outcome of the upcoming event as BTC has already hit new highs. Some believe that the post-half rally will be less dramatic than the market experienced after the events of the past.

However, market experts believe demand will drive BTC's post-halving rally this time around. This is when Bitcoin ETFs reach their full potential.