Bitcoin 1 month after Halving - Mining difficulty decreases, Runes receive less attention
On April 20, 2024, Bitcoin officially halved the 4th. This event created the most valuable block 840,000 in history with 2.4 million USD in additional rewards in the form of transaction fees. The revenue Bitcoin miners received on this day also reached 107.8 million USD.
This article will help readers look back at everything that happened around Bitcoin in the month after Halving, including:
· Runes Protocol ecosystem
· Bitcoin price
· Number of transactions on Bitcoin
· Bitcoin Layer 2
· Bitcoin Supply
· Bitcoin mining difficulty
Runes Protocol ecosystem
Runes Protocol officially launched in the same Bitcoin Halving block. In the first 10 days, more than 85,000 Runes were created, generating more than $3 million in transaction fees for miners. Daily transaction volume once reached an ATH of 364,000 transactions as investors flocked to seek opportunities from Runes Protocol.
Over the past 1 month, there has been an average of only 184 Runes created in the past 7 days with the number of transactions reaching 46,000. The trading volume of the top 10 Runes collections on the leading exchanges OKX, Magic Eden and UniSat also decreased sharply, reaching a total of only 3 million USD a day compared to the previous level of tens of millions of USD.
This is because Runes Protocol has not yet developed a product with intrinsic value, Runes creation and trading activities are mainly speculative.
The decrease in Runes trading activity also means that miners' revenue plummets when they do not receive abundant transaction fees from Runes traders. This is clearly shown in Bitinfochart's "Bitcoin Mining Profit" chart, the profit rate increased sharply from 0.104 to 0.175 on April 20, before dropping sharply to 0.0494 after 1 month, a decrease of 3 times.
Bitcoin price
For the first time in history, Bitcoin price reached an all-time high of 73,680 USD in mid-March 2024, 1 month before Halving. Many investors are starting to expect higher prices like $80,000, $100,000... especially with the explosion of Bitcoin ETFs.
However, after 1 month, Bitcoin price continuously decreased, reaching 57,000 USD and still shows no signs of recovery. This coincides with JPMorgan's prediction that Bitcoin is in an "overbought" state when analyzing open interest in Bitcoin futures.
However, many analysts believe that Bitcoin's decline is due to macroeconomic conditions, not due to Halving, many places in the world are at war, and FED interest rates still have no clear trend. Additionally, Bitcoin prices dropping by 20% or more each time they reach a new peak is something that has happened many times in the past.
“Currently, high interest rates in the United States are forcing risk assets, including cryptocurrencies, to correct, but we believe the uptrend remains intact for Bitcoin,” Aurélie Barther - Analysis Nansen staff shared with The Block.
Number of transactions on Bitcoin
Right after the Halving, the number of transactions on Bitcoin reached 925,000 transactions. To date, this number is only about 573,000 transactions, down nearly half compared to the previous month. This is mainly due to a sharp decrease in the volume of trading of Runes and Ordinals.
The decrease in the number of transactions on Bitcoin is also shown by Bitinfochart's "Bitcoin Fee in Reward" chart. Bitcoin's fee-to-reward ratio (the ratio of miners' income from transaction fees to the total block reward) has a serious decline from 75.5 to 4.3, just 1 month after Halving. Thus, miners' revenue depends more on Bitcoin block rewards than transaction fees.
Similar to Bitcoin, the token price of Layer 2 Bitcoins also decreased sharply. BVM is the Bitcoin Layer 2 with the strongest price drop of 69%. Community-supported Layer 2 Bitcoins such as Stacks and SatoshiVM also had a decrease of over 10%.
Transaction activity on Bitcoin decreased, so demand for Bitcoin Layer 2 also decreased. In the future, if Runes and Ordinals gain attention again, or Bitcoin develops new trends, demand for Bitcoin Layer 2 may increase again.
Bitcoin Supply
Every day, about 450 new Bitcoins enter circulation, equivalent to 30 million USD, with a steady state issuance rate of 0.83%. Meanwhile, about 8 tons of gold are mined every day, worth about 550 million USD, with a steady-state issuance rate of 2.3%. Considering the issuance rate, Bitcoin is officially rarer than gold.
After the Halving, the block reward for Bitcoin miners decreased from 6.25 Bitcoins to 3,125 Bitcoins, causing a decrease in the amount of new Bitcoins entering the market. In the future, if Bitcoin ETFs buy more Bitcoin than the new Bitcoin circulating on the market as they did in January 2024, Bitcoin price could continue to increase sharply.
Bitcoin mining difficulty
In the past, Bitcoin mining difficulty decreased by 12%, 5% and 9% at the first, second and third Halvings, respectively. At the 4th Halving, Bitcoin mining difficulty also decreased by 5.7% to 83.15 trillion, the network hashrate also decreased to only 576.54 Ehash/s. This is the largest decrease since December 2022, when Bitcoin was trading at around $17,000.
This is predictable because in the past, Bitcoin mining difficulty has always tended to decrease after Bitcoin Halving, before increasing again afterward. This is because the cost of mining Bitcoin almost doubled while the price of Bitcoin dropped after the Halving, forcing many miners to shut down because they no longer had enough money to maintain operations. However, the decrease in Bitcoin mining difficulty also makes it easier for new Bitcoin miners to enter the already competitive Bitcoin mining market.
summary
Bitcoin Halving is an event that happens every 4 years, greatly affecting miners, supply, Bitcoin price and more. Bitcoin's price dropping every time it reaches a new all-time high is something that has happened many times in the past.
Emerging trends such as Runes and Ordinals falling sharply after Bitcoin Halving also demonstrate the risky and speculative nature of investors. Therefore, new trends taking place on Bitcoin need to be carefully researched by investors before deciding to invest.
