“Bitcoin will be scarcer than gold on a stock-to-flow basis,” said analyst and co-founder of Reflexivity Research, Will Clemente, when referring to what will happen to Bitcoin after the next halving.
The halving has become the most popular topic among Bitcoiners and the crypto community, with just over 160 days left until its arrival on the Bitcoin network.
It is estimated that Block No. 840.000 Bitcoin, in which the next halving will occur, will be mined in mid- April 2024.
Source: Buy Bitcoin World Wide
The Bitcoin halving is an event built into the network protocol and is scheduled to occur every 210.000 blocks, which are mined approximately every four years.
The function of this event is to reduce, over time, the emission of bitcoins that occur on the blockchain. To achieve this, the halving reduces by half the block reward that miners receive when producing each new block and validating transactions on the network.
Historically, The halving has had a positive impact on the price of Bitcoin, boosting the value of the cryptocurrency and making it reach new highs in the market. Therefore, the halving has also become a key factor in building the Bitcoin narrative as digital gold.
Source: Bitcoin Magazine
JPMorgan strategists stressed last year that Bitcoin had become a gold rival, which has been considered a safe haven for thousands of years. However, as the private bank's strategists pointed out, Bitcoin is now “a hedge against inflation and an alternative to the depreciation of the dollar.”
JPMorgan highlighted the possibility that Bitcoin overtakes gold as investors, especially millennials, prefer to invest in the new “digital gold”, i.e. Bitcoin, rather than traditional gold.
Likewise, Adam Back, one of the most prominent figures in Bitcoin and the crypto industry, said that the inherent characteristics of Bitcoin have made it the Digital gold for the next millennia, ensuring that cryptocurrency will become the substitute for physical gold.
In line with this analysis, Will Clemente, co-founder of the firm Reflexivity Research, recently highlighted that the arrival of the next Bitcoin halving will make the cryptocurrency scarcer than gold in terms of the stock-to-flow ratio.
In addition to this, Clemente mentioned that Bitcoin is a superior asset to physical gold, “based on portability, divisibility, verifiability,” among other qualities that cryptocurrency possesses, such as programmability, immutability, and decentralization.
“Gold parity will be a great meme for Larry Fink and company to sell to Wall Street,” the analyst concluded on his social media.
On the other hand, in addition to the impact that the upcoming Bitcoin halving will have on the price of the cryptocurrency and its battle against gold, JPMorgan also pointed out the possible effects of this event on the network's hash rate.
In your report “Bitcoin Mining: Expanding Coverage”, JPMorgan analysts have outlined the possibility that a portion of the blockchain's computing power, at least about 80 exahashes per second (EH/s), could be eliminated as the older hardware used by miners disconnect from the blockchain.
Currently, Bitcoin mining difficulty has skyrocketed to a new all-time high of 62,46 trillion (T), according to data from CoinWarz. This metric tells us how difficult it will be to mine new blocks on the network.
So, it seems that the next Bitcoin halving will affect the profitability of many miners, who will be forced to close their activities and leave the network. However, although this paints an unfavorable picture, JPMorgan strategists also highlighted another of the possible advantages of the halving, such as greater energy efficiency in the network.
Continue reading: JPMorgan predicts new halving will reduce Bitcoin hashrate by 20%
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