How Will the 2024 Halving Event Impact Bitcoin Price?

• BTC’s stock-to-flow (S/F) divergence reached a 1-month low, indicating more room for bull cycles in the near future.
• The S/F divergence determines whether an asset is overvalued or undervalued based on its scarcity. Currently, the divergence was below 1, residing in the deeper green undervalued region as shown above.
• The bullish expectations due to the halving event have encouraged long-term Bitcoin holders to accumulate for the big day. Experienced BTC investors accounted for 75% of all circulating tokens.

Bitcoin’s price is undergoing a turbulent period, but investors’ hopes for the future remain strong. Will the Halving event boost the price?

A Deep Dive into the Effects of Bitcoin Halving

The impact of Bitcoin’s scarcity on its long-term value has been one of the most widely discussed and analyzed topics within the crypto community. Over the years, experts have developed several models that provide insights into the relationship between these two factors, assisting investors in making informed decisions.

According to a recent share by the on-chain analytics firm Glassnode, BTC’s stock-to-flow (S/F) divergence reached a 1-month low, indicating more room for bull cycles in the near future.

Simply put, the S/F divergence determines whether an asset is overvalued or undervalued based on its scarcity. Currently, the divergence was below 1, residing in the deeper green undervalued region as shown above.

You Might Be Interested In: Challenges Increase for Bitcoin Miners as BTC Price Continues to Fall The S/F divergence is derived by dividing an asset’s stock-to-flow ratio, one of the most popular models for Bitcoin’s price, created by anonymous analyst PlanB. This ratio compares the current Bitcoin stock to the newly minted Bitcoin quantity each year.

The narrative based on this model suggests that an asset’s value is directly proportional to its scarcity. The higher the ratio, the rarer the asset becomes, leading to a price increase.

This model indicates that the halving events, occurring approximately every four years (moments when the rate of coin issuance is cut in half), directly influence Bitcoin’s price. Data from Glassnode further supports this. Observe how BTC’s price remained calm leading up to the halving. Yet, once completed, it reached new peaks.

As of the time of writing, BTC was only approximately 0.2 of the value it ideally should be according to the S/F model. With the next halving event scheduled for April 2024, Bitcoin had the potential to fully realize its value.

Diamond Hands are Accumulating

The bullish expectations due to the halving event have encouraged long-term Bitcoin holders to accumulate for the big day. As of the time of writing, experienced BTC investors accounted for 75% of all circulating tokens.

With the close of a stormy week on August 19th, BTC bounced back above $26,000. At the time of writing, according to the data, it was trading at $26,070.