Welcome to the BTC Lighthouse report.

Bitcoin witnessed a historical moment last week, its 4th Bitcoin Halving.

In this report, I discuss:

• Will the Bitcoin Halving event disappoint investors
• How Bitcoin has overtaken Gold
• What's happening with Bitcoin ETF inflows

Some readers could not see the graphs in the previous report, 'War and the Bitcoin Price'. I have updated the graphs, and it should be visible to everyone.

BTC Lighthouse Temperature

Bitcoin's price has increased slightly since last week, but despite that, the BTC Lighthouse temperature has further retreated into the Neutral zone.

This is possible. The temperature is linked to the Bitcoin price but not directly. Various other parameters determine the temperature, like the current price relative to its price in the past.

Since the Bitcoin price has been consolidating in this range over the last month, although the price has increased slightly, the temperature has decreased.

Bitcoin ETFs

Bitcoin ETF flows have been stagnant since mid-March. The Bitcoin price is highly correlated to ETF inflows; hence, the prices have also been range-bound over the last month.

The market seems to be adjusting to the rapid increase in Bitcoin prices before the inflows start again.

4th Bitcoin Halving

Bitcoin Halving is a major event that happens with Bitcoin every 4 years when the creation of new Bitcoin is cut by half.

This event happened for the 4th time last week on 19th April 2024, and the rate of Bitcoin creation was cut from ~330,000 Bitcoin to ~165,000 Bitcoin per year.

In the past, Bitcoin's price touched a new all-time high 12-18 months after a halving event, and many people are expecting the same from Bitcoin this time. This is because there is a reduction in Bitcoin's supply, and the demand keeps increasing, which causes Bitcoin's price to increase.

However, every halving event has a lesser impact on the supply than previous halving events.

Last week, the halving event saw the supply of Bitcoin reduce from 1.8% per year to 0.8%, a change of 1%. A cut of 1% in supply is significant but less than cuts of 2.4% and 8.3% in the previous halving events.

There is another reason I place lesser importance on the current halving event on Bitcoin's price.

The daily trade volume of Bitcoin is approximately $50 billion.
At the current price of $65k, the value of newly minted Bitcoin is:
450 Bitcoin per day * $65k, = ~$ $29 million.
This is 0.06% of the daily trade volume, an insignificant number.

Most of the supply of Bitcoin on exchanges is from existing Bitcoin investors and not from the newly created Bitcoin.

Yes, Bitcoin Halving is an important event that increases its scarcity. However, the impact of the current halving event on Bitcoin's supply and price will be insignificant.

I am bullish about Bitcoin and expect new all-time highs this year, but that's because I expect the demand to increase, not because of the current Bitcoin Halving event, as many others are voicing on mainstream media.

Bitcoin vs Gold

After this halving event, Bitcoin overtook Gold to become the scarcest commodity known to mankind. Let me explain.

Gold

The current stock of Gold is ~212,000 tonnes.
The quantity of Gold mining per year is ~3,000 tonnes.
So the percentage of newly mined Gold to the existing supply is 3,000 / 212,000 = 1.4%.
This made Gold the scarcest commodity in the world...until last week.

Bitcoin

After the 4th Bitcoin Halving event, the current stock of Bitcoin is ~19,600,000 Bitcoin.
The quantity of newly created Bitcoin per year is ~164,000 Bitcoin.
So the percentage of newly minted Bitcoin to the existing supply is 164,000 / 19,600,000 = 0.8% vs Gold's 1.4%.
For the first time in history, we have a commodity that is more scarce than Gold.

The scarcity of Gold has given it a market cap of $15 trillion. Bitcoin is only at $1.3 trillion. Bitcoin is on its journey to capture the market cap of Gold.

Please give your comments and feedback on this report. See you in the next block.

Sandeep Goenka