| Kraken Intelligence

Kraken Releases ‘The Halving: Trends & Implications of Bitcoin’s Supply Inflation Mechanism’

About every four years, the Bitcoin network programmatically reduces the supply of new bitcoins it introduces to its economy with each block.

Known as the “halving” or “halvening,” this event has occurred twice in bitcoin’s history, kicking off bull runs with price appreciation of 9000% and 3,000% in 2012 and 2016, respectively.

So, while there’s no assurance history will repeat, expectations are high with the third halving scheduled to occur this May. Already, experienced market participants are debating whether the halving is priced in the market and whether it will spark the next bull run.

To help you understand the potential impact on your portfolio, Kraken Intelligence, our team of in-house research experts, has released a new note, entitled “The Halving: Trends & Implications of Bitcoin’s Inflation Mechanism.”

At just 11 pages, the report gives a succinct yet comprehensive analysis of the halving, including its history and significance.

The research note covers topics essential to understanding the halving, including:

  • Historical analysis of the first two halvings: You’ll get an overview of price activity surrounding the first two halvings, including charts and an analysis of the patterns common to both.
  • Bitcoin as a store of value: Understand the connection between the halving and Bitcoin’s monetary policy, and how disinflationary assets have proven to be a better store of value over time. For example, we compare Bitcoin’s increasing value to the decreasing value of major fiat currencies.
  • The scarcity of Bitcoin: Learn how scarcity is commonly measured by the stock-to-flow (SF) ratio and see how Bitcoin’s SF ratio is affected by the next halving. Also, see how Bitcoin’s SF ratio compares to gold and other commodities.
  • Impact on miners: Understand how Bitcoin miners are affected by the next halving. You’ll learn how much of mining revenue comes from block rewards vs transactions fees, and how much transaction fee income would need to increase in order to fill the gap in block revenue.

For more insights into the halving, read our full report below or bookmark the Kraken Intelligence page on our blog.