Glassnode: Bitcoin halved for the fourth time, and a number of indicators were broken

原文标题：The Fourth Halving

Author: UkuriaOC

原文来源：glassnode

Compiler: Lynn, Mars Finance

Executive Summary

• The fourth halving of Bitcoin has already taken place, with a 50% reduction in annualized inflation in the Bitcoin supply, decisively surpassing gold in terms of issuance scarcity.
• When measuring the halving period, growth rates are declining in multiple network statistics, while the absolute value of these measures continues to climb to the new ATH.
• Investor profitability was boosted by higher spot prices and a decisive ATH breakout, which dampened a 50% drop in miners' revenues from the start of the year.

💡 Check out all of the charts for this issue in This Week's On-Chain Dashboard.

Deflationary supply

Thanks to an ingenious mining algorithm called "difficulty adjustment", the Bitcoin supply curve is deterministic. The protocol adjusts the difficulty of the Bitcoin mining process so that the average block interval remains around 600 seconds (10 minutes), regardless of the number of mining rigs applied.

Every 210,000 blocks (approximately a 4-year time period), a predetermined reduction in issuance occurs, with a 50% decrease in newly minted BTC coins. The fourth Bitcoin halving took place over the weekend, when the block subsidy dropped from 6.25 BTC per block to 3.125 BTC, or about 450 BTC per day (for the 144 blocks mined).

Real-time charts

Entering the Fourth Era, 19,687,500 BTC has been mined and issued, equivalent to 93.75% of the terminal supply of 21 million BTC. As a result, there are only 1,312,500 BTC left available for issuance in the next 126 years, of which 656,600 (3.125%) are currently issued by Epoch. Interestingly, each halving represents a point:

• The remaining supply percentage is equal to the new block subsidy (3.125 BTC/block vs 3.125% remaining).
• 50% of the remaining supply (1,312,500 BTC) will be mined between the fourth and fifth halvings.

On-site workbench

As the block subsidy halves every 210,000 blocks, the inflation rate also halves roughly every 4 years. This puts the new annualized inflation rate of Bitcoin supply at 0.85%, down from 1.7% in the previous period.

The fourth halving also marks an important milestone in the comparison of Bitcoin to gold, with the first time in history that Bitcoin has a steady-state issuance rate (0.83%) lower than gold (~2.3%), marking a historic handover of the title of Bitcoin's most scarce asset.

Keep perspectives

However, it is important to put the scale of the halving in perspective. When assessing the relative impact of the halving on market dynamics, the number of newly minted coins is still very small compared to the global trading volume within the Bitcoin ecosystem.

Issuance is only a fraction of the volume of on-chain transfers, spot volumes, and derivatives we see today, and currently equates to less than 0.1% of the total capital transferred and traded on any given day.

As a result, the impact of the Bitcoin halving on the available transaction supply has diminished across cycles, not only because of the decrease in the amount of Bitcoin mined, but also because of the expansion in the size of the assets and ecosystem surrounding it.

On-site workbench

Down-to-earth expectations

The halving is an important and well-publicized event, which naturally leads to increased speculation about its impact on price movements. Balancing our expectations with historical precedent and creating loose boundaries based on past performance can be useful.

Bitcoin's price performance has varied widely across halving periods, and we believe that the early halving periods were very different from today's ones to be a great guide. Over time, we do see diminishing returns and a waning total drawdown effect, which is a natural consequence of the growing size of the market and the scale of capital flows needed to drive market growth.

• 🔴 Epoch 2 price performance: +5315% with a maximum drawdown of -85%
• 🔵 Epoch 3 price/performance: +1336% with a maximum drawdown of -83%
• 🟢 Epoch 4 price/performance: +569% with a maximum drawdown of -77%

On-site workbench

Assessing the price performance from the low of the cycle to the halving, we note that there are clear similarities between 2015, 2018 and the current cycle, all of which experienced growth of about 200% to about 300%.

However, our current cycle is the only one on record that decisively breaks through the previous ATH before the halving event.

On-site workbench

Another perspective is to examine the performance of the market over a 365-day period after each halving. The performance of the Second Era is much larger, but we must take into account that the dynamics and landscape of today's markets have changed significantly relative to the 2011-2013 period.

As a result, the last two epochs (3 and 4) provide a richer picture of the impact of asset size.

• 🔴 Epoch 2 Price Performance: +7,258% with a maximum drawdown of -69.4%
• 🔵 Epoch 3 price/performance: +293%, max drawdown of -29.6%
• 🟢 Epoch 4 Price Performance: +266% with a maximum drawdown of -45.6%

While the year following the halving event has been historically strong, there have also been some significant drops in internal inspections along the way, ranging from -30% to -70%.

💡 For more information on cross-cycle price performance, visit the dashboard here.

On-site workbench

History sometimes rhymes

During the 2022 bear market, a common saying was that the price would never fall below the ATH of the previous cycle (then $20,000 set in 2017). This is certainly ineffective, as prices are down more than 25% from their 2017 cycle highs during the widespread deleveraging process at the end of 2022.

Recently there has been a similar narrative circulating that the price cannot break through the new ATH until the halving takes place. In March of this year, the regulation expired again. The ATH we saw in March stemmed from historically tight supply (WoC-46-2023) and significant demand interest from new spot ETFs.

On-site workbench

The price increase has also had a significant impact on the unrealized profits held by investors. Currently, the unrealized profit held in the token supply is the largest (measured in MVRV) since the halving event.

In other words, as of the date of the halving, investors hold the largest book gain relative to their cost base. The MVRV ratio is 2.26, which means that BTC's average book return per unit is +126%.

On-site workbench

Fundamental growth

In the previous section, we evaluated historical price performance centered on halving. In the next section, we'll turn our focus to the growth of network fundamentals, including mining security, miner income, asset liquidity, and settlement volume during the halving period.

Hash rate is a network statistic used to evaluate the collective "firepower" of the mining community. During the halving period, the rate of growth in hash power has slowed, but the absolute hash value per second continues to grow and is currently 620 Exahash per second (equivalent to 77.5 billion hashes per second for all 8 billion people on the planet).

Interestingly, hashrate is at or near the new ATH at each halving event, suggesting that two scenarios can occur:

1. More ASIC devices coming online and/or,
2. More efficient hash ASIC hardware is in production.

The conclusion from both scenarios is that although issuance is reduced by 50% with each halving, the overall security budget is not only sufficient to sustain the current OPEX costs, but also to stimulate further investment in the CAPEX and OPEX sectors.

💡 For more information on the growth of several on-chain metrics per halving period, please visit our dashboard.

On-site workbench

In dollar terms, the growth rate of miners' revenues is also declining, but the absolute scale is expanding netly. Over the past 4 years, miners have accumulated a staggering $3 billion in revenue, an order of magnitude increase from the previous Epoch.

On-site workbench

The realized cap is a powerful tool for measuring the capital invested and stored in Bitcoin over time and can be used to compare dollar-denominated cross-cycle liquidity growth.

With this measurement, a total of $560B worth of net value in USD is "stored" in Bitcoin. The realized cap represents a 439% increase from the previous period, underpinning the asset's current market capitalization of $1.4 trillion. It's also worth noting that capital continues to flow in despite Bitcoin's notorious volatility, poor headlines, and cyclical drawdowns.

On-site workbench

Finally, if we evaluate the volume of transfers settled during the halving period, we can see that the economic value of network transfers and settlements has been as high as $106T over the past four years. Now it's important to note that this takes into account raw unfiltered transaction volumes and doesn't adjust for internal wallet management.

Nonetheless, every transaction is settled without intermediaries, highlighting the Bitcoin network's incredible ability to handle value at scale.

On-site workbench

Conclusion and Summary

With the completion of the highly anticipated halving, the issuance of each block halved, and the scarcity of the asset intensified, with the scarcity of the issuance of Bitcoin assets decisively surpassing gold.

Comparing the various periods, the growth of hashrate, network settlement, liquidity, and miner income all contracted. However, the absolute value of these indicators has increased by an order of magnitude, which is an incredibly impressive feat in terms of market size.

Notably, market investors across a wide range of industries have seen a significant increase in network profitability compared to the previous halving. This includes the base miner class, which has entered the halving and has reached ATH for hash power, indicating that there is enough security budget to stimulate operating expenses and capex needs.