Why this year’s Bitcoin half is “really different”: Gray

The upcoming Bitcoin (BTC) halving may be a serious development, but several external factors mean it may not be the same as in previous years, Grayscale says.

Last month, the company successfully turned the Greyscale Bitcoin Trust (GBTC) into the world's largest Bitcoin ETF. According to Grayscale, the introduction of such ETFs can affect the price of Bitcoin for about the second half of a year.

Are Bitcoin ETFs Second Half?

In a blog post on Friday, the company said:

“If you divide the daily net income ($10M) by the daily bitcoin ($19M), assuming there is $10M in daily net income from ETF products, you get approximately 50%, which is the same as the effect. The other half.”

Since last month, Bitcoin ETFs have taken in a total of $2.6 billion.

In contrast, a “halving” occurs when the Bitcoin network halves the number of new coins available in each Bitcoin block. This happens roughly once every four years, with the next halving reducing Bitcoin's block reward from 6.25 BTC to 3.125 BTC in April.

Grayscale notes that the event is followed by historically hot bull markets heading to new all-time highs next year. However, attributing these rallies solely to Bitcoin's declining supply inflation may be an understatement.

“These times seem to coincide with significant macroeconomic events,” Grayscale wrote, highlighting the property boom in 2020 after the Covid-19 pandemic prompted the government to take massive stimulus measures.

Although macroeconomic headwinds are uncertain, the market is currently optimistic about a 50% Federal Reserve rate cut in May, according to CME's FedWatch.

A new dawn for Bitcoin miners and developers

With the price of Bitcoin itself, half of the events coincide with ineffective players in the mining industry who can't afford to work with only half of the previous BTC reward.

With the network's hashrate increasing and the block grant falling, Grayscale says miners may be in a “troublesome situation” in the near future.

There is a silver lining, however: Bitcoin miners have the advantage of Ordinals, which this year have halved Bitcoin network activity, transaction fees, and mining revenue from Bitcoin's fixed block reward and schedule.

While higher fees could hurt Bitcoin's use case for payments, Grayscale added that Ordinals has spurred innovation that could help solve Bitcoin's evolution problems. For example, some startups have announced new blockchain technologies that allow users to link Bitcoin into more scalable blockchains.

“These dApps are at the forefront of Bitcoin's transition to a multifaceted ecosystem capable of supporting multiple blockchain-based applications,” Grayscale said.