After Halving BTC Will Need 2x Less Cash Inflow to Maintain $7k Levels

Bitcoin metal coin and the chart behind.
2 years ago
2 mins read

In slightly more than one month from this writing, Bitcoin is set to undergo its next halving process. The process, which recurs after every four years has drawn many reactions from crypto analysts and enthusiasts. One theory that arises now is that Bitcoin will need two times less cash inflow every month to maintain $7000 levels.

Bitcoin will need only $200M to maintain the $7k level

The well-known stock-to-flow (S2F) Bitcoin price forecasting model creator and crypto analyst PlanB, believes that for the last two and a half years (since October 2017), Bitcoin requires approximately $400M new cash inflow every month to maintain the $7000 level. Assuming that all trading is a zero-sum game, the analyst works with a methodology of 30 days x 24 hours x 12.5 BTC x $7000.

However, after the upcoming halving, the Bitcoin network will require only $200M to remain at the same level. All the same, some enthusiasts believe some activities are still uncertain, as they are “still waiting to see what happens in the halvening.”

Should there be positive movement, the media will highlight it and create “a positive reflexivity loop.” Some experts underline the uncertainties that might adjust the Bitcoin network after the halving event, such as miner capitulation, death spiral, among others.

Bitcoin halving in brief

Bitcoin miners are rewarded for each new block of coins they create that enter the network. After every 210,000 blocks, the number of block rewards that miners win reduces by half. It’s part of what drives the market value of Bitcoin

Unlike most national currencies we’re familiar with like dollars or euros, bitcoin was designed with a fixed supply and predictable inflation schedule. There will only ever be 21 million bitcoins. This predetermined number makes them scarce, and it’s this scarcity alongside their utility that largely influences their market value.

This process takes place after every 210,000 blocks are mined or approximately every four years. Bitcoin network started in 2009 with 50 coins produced every ten minutes. The first halving took place in 2013 when the miner reward was reduced to 25. The second halving happened in 2017 when the reward was halved to 12.5. The upcoming halving will see miner rewards reduced to 6.25.

This process is set to continue until miners produce all the 21 million BTC coins, which is the maximum supply.

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Justinas Baltrusaitis

Justin crafts insightful data-driven stories on finance, banking, and digital assets. His reports were cited by many influential outlets globally like Forbes, Financial Times, CNBC, Bloomberg, Business Insider, Nasdaq.com, Investing.com, Reuters, among others.