It has been approximately four days since Bitcoin's highly anticipated fourth halving event took place, and early data analysis is shedding light on its effects. One of the notable outcomes of the halving is the significant drop in Bitcoin's supply inflation rate, in line with expectations. Previously, each block-mined every ten minutes produced 6.25 new BTC, but now that number has halved to just 3.125 BTC.

Prior to the halving, the Bitcoin network generated around 900 BTC daily, resulting in a 1.7% inflation rate. With the reduced block subsidy, the new figures indicate roughly 450 BTC per day, bringing the annual inflation rate down to 0.85%. A recent report from Glassnode reveals that Bitcoin's supply issuance rate now stands decidedly below that of gold, which historically holds a 2.3% inflation rate.

Bitcoin enthusiasts argue that the digital nature of the cryptocurrency gives it an advantage over precious metals like gold, as it is more divisible and portable, positioning BTC as a modern-day medium of exchange. The halving ensures that Bitcoin's supply will be more limited than gold, theoretically enabling it to preserve its value over time instead of being eroded by inflation.

However, when it comes to Bitcoin's price movements, some analysts argue that the halving may not have a significant impact. Glassnode's on-chain analysis report points out that the issuance of new coins after the halving represents only a fraction of the daily trading volumes and does not significantly influence the price. They suggest that the halving is more of a "narrative game" that lacks substantial relevance.

Interestingly, unlike previous halvings, Bitcoin's price managed to break its previous all-time high even before the end of the fourth halving epoch. This performance may have been influenced by the launch of U.S. Bitcoin spot ETFs months earlier, with prominent market participant BlackRock's Larry Fink actively promoting Bitcoin as "digital gold" to investors.

However, in terms of price gains between halving events, the fourth epoch witnessed a rise of only 569% compared to the 1,336% increase seen in the third epoch. Glassnode suggests that this diminishing return on investment may be a natural consequence of the growing market size and the significant capital required to drive price movements.

Despite the halving resulting in a major reduction in miner revenues, the mining industry has remained robust. Bitcoin's network hash rate, which measures the overall computing power dedicated to securing the network, reached or approached all-time highs in the run-up to every halving event, including the most recent one. Additionally, on-chain data reveals that miner revenues actually surged after the halving, thanks to the introduction of the Bitcoin token protocol "Runes," which drove up network transaction fees.

As market participants continue to analyze the impact of the halving on Bitcoin's inflation rate, supply issuance, and price dynamics, it remains clear that Bitcoin's fourth halving event has led to a significant reduction in new supply entering the market. The implications of this development on the cryptocurrency's long-term value preservation and investment returns are expected to be closely monitored in the coming months.

Get daily updates on the latest in the crypto world by subscribing to our newsletter.