Grayscale Bullish on Bitcoin's Strength Post-Halving

Bitcoin's upcoming halving could see increased prices due to lower selling pressure and growing interest.

Bitcoin is poised for a potential price surge post-halving, with increased on-chain activity and interest in Bitcoin-based applications contributing to its enhanced fundamentals, according to crypto asset management firm Grayscale.

As Bitcoin's halving event approaches, the reduced selling pressure and the emergence of native Bitcoin-based applications are expected to drive a sustained price uptrend.

Grayscale's research note highlights the significant improvement in Bitcoin's technical fundamentals and use cases over the past year, making the cryptocurrency "stronger" compared to previous halving events. Michael Zhao, a researcher at Grayscale, noted, "While it has long been heralded as digital gold, recent developments suggest that bitcoin is evolving into something even more significant."

The introduction of ordinal inscriptions and BRC-20 tokens has reinvigorated on-chain activity, generating over $200 million in transaction fees for miners as of February 2024, according to Zhao. The BRC-20 standard, introduced in April, enables users to issue transferable tokens directly through the Bitcoin network, with inscriptions operating on the Ordinals Protocol.

The Ordinals Protocol allows users to embed data on the Bitcoin blockchain by inscribing references to digital art into small Bitcoin-based transactions, contributing to increased transaction fees during periods of network demand.

Grayscale also anticipates positive market structure dynamics for Bitcoin post-halving, with lower rewards requiring relatively less buying pressure to sustain prices. The report suggests that decreased selling pressure, coupled with growing demand, could lead to higher prices.

Spot bitcoin exchange-traded funds (ETFs) have played a role in boosting buying pressure, accumulating over 192,000 bitcoins in holdings since their launch less than a month ago. These ETFs have quickly attracted significant investment, allowing investors to gain exposure to bitcoin without direct ownership.

As Bitcoin approaches its halving, Grayscale remains optimistic about its strengthened fundamentals and market dynamics, signaling potential positive outcomes for the leading cryptocurrency.

(Photo Source / Blockonome)