For Bitcoin (BTC) enthusiasts, the long-awaited moment is finally approaching. This Friday, April 19, around 9 PM ET, marks the highly anticipated Bitcoin halving event. During this event, the rewards for miners who successfully validate new transactions on the Bitcoin blockchain will be halved, reducing from the current 6.25 BTC to 3.125 BTC.
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Almost 94%, or ~19.7 million, of Bitcoin’s fixed 21 million supply cap have now been mined and over the next 116 years, the rest will be dug up. And for the first time in its 15-year existence, Bitcoin’s annual inflation rate will now fall beneath that of gold.
According to H.C. Wainwright’s Mike Colonnese, a 5-star analyst rated in the top 4% of the Street’s stock pros, this transition solidifies Bitcoin’s status as a “scarcer asset.” Colonnese estimates that Bitcoin’s annual inflation rate will fall from the current 1.7% to 0.83% post halving, thereby dropping below gold’s 1.3%. (To watch Colonnese’ track record, click here)
“As we have discussed in prior reports,” the analyst goes on to say, “these events have historically preceded parabolic rises in the price of BTC, and we believe the same will prove to be true for this cycle.”
Given the rewards for miners get cut in half, these companies will be raking in less revenues, although at BTC’s current price ($60,850 at the time of writing), the analyst thinks the public miners will “still be able to generate healthy margins,” while also noting that by now the investment community is well aware of the event.
Colonnese estimates that post halving all-in production costs for miners will come in at ~$42,500. “As such,” he adds, “we believe the public miners have plenty of breathing room at current price levels and generally have solid balance sheets to withstand the halving of the block subsidy on Friday.”
One major difference between this halving and the previous ones is that this time Bitcoin reached a new all-time high before the event took place (topping $73,800 on March 13), something that has never happened before. The catalyst for that has been the approval and highly successful launch of spot ETFs in the U.S., which have collectively seen total net inflows of $12.5 billion in around three months.
But that doesn’t mean that following the halving the peaks won’t be as spectacular this time around. While Colonnese’ short-term outlook for Bitcoin considers “a period of consolidation, and perhaps a short-term correction,” his outlook has BTC potentially hitting a big milestone before the year is out. “We believe it is plausible that BTC could reach the six-figure mark by the end of this year, as investment advisors and the big banks make the spot BTC ETFs accessible for their clients, which would drive significant incremental inflows into BTC, while rate cuts remain on the table for 2024, also bullish for BTC,” he said. (Visit Bitcoin analysis page)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
