Bitcoin 'Stronger’ Ahead of Halving: Grayscale

Bitcoin could see a steady price increase after its halving event on lower selling pressure and new interest in native Bitcoin-based applications.


Bitcoin's Technical Fundamentals and Use Cases

According to a research note by crypto asset management Grayscale, Bitcoin's technical fundamentals and use cases have significantly increased in the past year, making the asset 'stronger' ahead of its upcoming halving event. Grayscale researcher Michael Zhao stated that recent developments suggest that Bitcoin is evolving into something even more significant than just digital gold. The halving event, which is part of the Bitcoin network's code to reduce inflationary pressure, historically precedes bull runs.

The advent of ordinal inscriptions and BRC-20 tokens has revitalized on-chain activity on Bitcoin, generating substantial transaction fees for miners. These tokens, called inscriptions, function on the Ordinals Protocol and allow users to embed data on the Bitcoin blockchain. The introduction of BRC-20 tokens in April has attracted renewed developer interest and ongoing innovations on the Bitcoin blockchain. The fees generated from these ordinals have comprised more than 20% of miners' monthly revenue, emerging as an important source of income.

Bitcoin ETFs Driving Buying Pressure

In addition to positive on-chain fundamentals, the market structure of Bitcoin looks beneficial to price post-halving, according to Grayscale's report. Lower rewards from the halving are expected to require relatively lower buying pressure to maintain prices, and increased demand could lead to higher prices. Currently, spot bitcoin ETFs have accumulated over 192,000 bitcoins in holdings, just one month after their launch. These ETFs have attracted billions of dollars from investors looking to gain exposure to bitcoin without directly buying and storing it.