The highly anticipated “Halving” of Bitcoin, scheduled for this weekend of April 19, 2024, raises many questions among analysts. Will this halving of the issuance of new BTC have a significant impact on its inflation rate and its status as a safe haven against gold?
An inflation rate soon to be lower than that of gold
Halving, a deflationary mechanism unique to Bitcoin encoded in its protocol, occurs every 210,000 blocks mined (approximately every 4 years). On April 19, the miner reward will increase from 6.25 BTC to 3.125 BTC per block.
According to'analysis from 21st.Capital, this reduction in the rate of issuance of new bitcoins mechanically compresses the annual inflation rate. Currently around 1.7%, it is expected to fall below 1% after the event, thus becoming lower than that of gold (around 2% per year).
Unlike fiat currencies whose mass central banks can increase at will, Bitcoin limits its supply to 21 million units. Around 19.7 million BTC have already been mined, and this ceiling will not be reached until around 2140 according to estimates.
This programmed scarcity gives Bitcoin unique resistance to inflation, where annual gold production tends to grow, a potentially decisive advantage in establishing its status as a safe haven according to many financial analysts.
A store of value in the making despite volatility
However, despite these unique disinflationary properties, Bitcoin remains a relatively young and volatile asset compared to gold, a proven store of value for millennia. Its growing adoption, marked by milestones such as the approval of spot ETFs by the American SEC and its record of $73,000 in March 2024, does not prevent it from experiencing strong variations.
To establish itself as a recognized store of value in the face of inflation, Bitcoin will still have to prove itself over time and gain stability. The challenge will be to transform its theoretical “Hard Money” into concrete and reliable protection of heritage, a role today played by gold according to specialists like Peter Schiff.
In short, this 4th Halving offers a new demonstration of the programmed resilience of Bitcoin in the face of inflation. With scarcity increasing and the inflation rate poised to fall below that of gold, there is growing interest in its potential as a capital hedge. The challenges of volatility are expected to gradually fade as this revolutionary technology matures.
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