Bitcoin’s Halving: Inflation Rate and Store of Value Analysis

The highly anticipated Bitcoin blockchain halving is just days away, and experts believe that this event could have a significant impact on the cryptocurrency’s status as a store of value. As of now, there are approximately 630 blocks left to mine before the halving occurs on April 19. In 2024, Bitcoin reached an all-time high price of over $73,000, and the US Securities and Exchange Commission approved the listing and trading of Bitcoin exchange-traded funds. Despite its price volatility, many believe that Bitcoin can serve as a hedge against inflation, especially as central banks around the world continue to devalue fiat currency by printing money.

Bitcoin’s fixed supply of 21 million coins, with roughly 19.7 million already in circulation, is seen as a key factor in its potential as a store of value. With the upcoming halving, which will be the fourth in Bitcoin’s history and the first since May 2020, the block reward for miners will be reduced from 6.25 BTC to 3.125 BTC. This will effectively halve Bitcoin’s inflation rate from approximately 1.7% to 0.85%, reducing the new supply of the cryptocurrency. If demand remains constant or increases, this could cause the price of Bitcoin to rise.

Historically, previous halving events have resulted in price increases for Bitcoin. Many users in the US already use Bitcoin as a hedge against the inflation of the dollar, and countries with hyperinflation, such as Argentina, may also turn to Bitcoin as a store of value. The way countries regulate and adopt Bitcoin can significantly impact its price. Analysts closely monitor the US’s approach to regulation, as the country accounts for about a third of all Bitcoin mining.

Following the halving, Bitcoin’s scarcity will increase, making it a more appealing store of value. Some are even considering how Bitcoin will stack up against gold, which has long been considered a traditional store of value. Bitcoin’s price volatility is expected to continue, but its inflation rate is anticipated to drop below that of gold. Gold bug Peter Schiff, Has yet to directly address this issue on social media.

Based on historical data and the upcoming halving, the last Bitcoin block reward is projected to occur in 2140. According to the Bitcoin white paper, at that point, miners will transition entirely to transaction fees as the incentive for mining, with all 21 million coins mined. The halving event has sparked discussions and speculation about the future of Bitcoin as a store of value and its potential compared to other assets like gold.