Bitcoin Inflation Reaches Record Low After Halving Event
Bitcoin has achieved a significant milestone with its inflation rate hitting an all-time low of approximately 1.74%. This comes just days after the latest Bitcoin halving. With 93.3% of Bitcoin already mined, leaving only 19.6 million out of the possible 21 million BTC, the scarcity factor is expected to increase demand and potentially cause a surge in the price of the leading cryptocurrency.
In contrast, fiat currencies experience higher inflation rates due to government controls and economic policies. In 2023, countries like Argentina faced extremely high inflation rates, reaching 161.0%. The European Union reported more moderate levels, with an annual inflation rate of 2.9% in December 2023.
The recent halving event is predicted to further decrease Bitcoin’s inflation rate, impacting its scarcity and influencing investor behavior. Historical data shows a trend of significant price growth in Bitcoin following each halving event. After the first halving in 2012, the price of Bitcoin surged by 8,858%. Subsequent halvings saw diminishing returns, but the pattern of price spikes post-halving remains evident.
These events not only affect Bitcoin but also have an impact on other top cryptocurrencies like Ethereum, although the effects vary due to different supply mechanisms. The completion of the fourth halving has left the cryptocurrency community speculating about short-term market dynamics. Bitwise recently stated that while the month immediately following the halving typically sees a slight drop in price, the subsequent year often witnesses exponential gains.
Bitcoin’s market cap also fluctuates around halving events, providing insights into consumer behavior during these pivotal times. During the first halving, the market cap initially stood at $123.3 million and quickly soared to $947.4 million. Similar patterns were observed in subsequent halvings, indicating a tendency among Bitcoin holders to hold onto their assets in anticipation of value increases.
The analysis of pre and post-halving periods suggests a strong inclination toward holding Bitcoin, as it is believed to become more valuable as future supply constraints tighten after each halving.
More on Bitcoin: Bitcoin Price Prediction 2024 – 2034