Bitcoin to become twice as rare as gold this year, says global exchange

With the curious 'halving' event ahead, what will happen to the crypto's value?

Bitcoin to become twice as rare as gold this year, says global exchange
Steve Randall

The number of bitcoin available to crypto-hungry investors is set to be squeezed and there may be only nine months of supply left.

That’s because levels of demand remain high ahead of the four-yearly ‘halving’ event which is baked into the cryptocurrency’s code and cuts the rewards for the coin’s miners which reduces the rate at which new coins are created. The 2024 halving is due to take place later this week.

A new report from ByBit, one of the three largest crypto exchanges by trading volume with 25 million users, suggests bitcoin will become twice as rare as gold based on its stock-to-flow (S2F) ratio, which is calculated by dividing the circulating supply of a commodity by its annual production, yielding a gauge of scarcity. Bitcoin prices have already been at record highs this year.

"Bitcoin's S2F ratio is around 56 before the upcoming halving, while gold is 60. After the halving in April 2024, Bitcoin's S2F ratio is projected to double to 112,” the report says.

There can only ever be 21 million bitcoins and the halving is expected to intensify reserves in the central exchanges.

"With only 2 million bitcoins left, if we assume a daily inflow of $500 million to Bitcoin Spot ETFs, the equivalent of around 7,142 bitcoins will leave exchange reserves daily, suggesting that it will only take nine months to consume all of the remaining reserves,” the report states.

"Each bitcoin halving sharpens the narrative of bitcoin as not just a currency, but a scarce digital asset, akin to digital gold," said Ben Joe, co-founder and CEO of Bybit. "This upcoming halving in 2024 will thrust bitcoin into an era of unprecedented scarcity, making it twice as rare as gold."

Bitcoin was valued above US$63 early Wednesday, down around 1%, but some are warning that it could slump in the aftermath of halving as hype surrounding the event fades, although longer term it is expected to gain.

The bitcoin landscape has been evolving and earlier this year Coinbase announced its registration as a Restricted Dealer by the Canadian Securities Administrators (CSA) marking a significant milestone as the first international and largest cryptocurrency exchange to obtain such registration in Canada.