[Bitcoin Ecology] Has strong Bitcoin ETF demand killed the halving bull rally?

Experts predict that the upcoming Bitcoin halving may not have as big an impact on the price of Bitcoin as previous cycles.

That’s because spot Bitcoin exchange-traded funds (ETFs) have pushed Bitcoin to new highs as supply pressure intensifies.
Nonetheless, the long-term impact on Bitcoin prices and subsequent flows into ETFs will be positive.
The Bitcoin (BTC) halving is often seen as a bullish price catalyst, but due to the approval of spot exchange-traded funds (ETFs), the halving may not be as positive as the market thinks.

The halving, which occurs every four years, will cut Bitcoin's supply growth in half, which has historically put upward pressure on the price of the largest digital asset. Previous halving cycles have pushed Bitcoin to new highs, and this time, strong demand for spot ETFs may add more momentum to the rally.
“If we look at the overall demand for ETFs since they launched, it has caused a huge supply shock,” said Brian Dixon, CEO of investment firm Off the Chain Capital. “Once the halving occurs, supply will It is logical that the further the volume decreases, the higher the price will be.”

On the surface, this may be the case, as demand from the fund clearly exceeds the 900 new BTC being mined every day. When supply is cut in half, there could be a bigger pull on prices.
However, it might not play out the same way this time around.

Bitcoin’s price has risen 46% since the spot ETF began trading in the United States on January 11. Demand for these funds was so strong that the price of the digital asset rose to all-time highs. But the market hype may be exaggerated.
"This is the first time Bitcoin has broken through its all-time high before the halving, so there are concerns that ETFs are driving demand and maybe we will hover at current levels for a while." said David Lawant, director of research at FalconX.

Anthony Anderson, founder and CEO of Param Labs and Kiraverse, echoed this sentiment. “Bitcoin ETFs have taken advantage of the supply halving by acquiring large amounts of BTC since the beginning of the year.”
Additionally, James Seyffart, an ETF analyst at Bloomberg Intelligence, said that with investor demand already strong, the halving likely won't affect ETF flows, at least in the short term.

“We know that many miners use OTCs to sell their Bitcoin, and ETF issuers also use OTC platforms to acquire Bitcoin as money flows into the funds. So, in theory, miners sell less Bitcoin. Half likely means that ETF inflows will have a larger impact, but over the past few months, ETF inflows have far exceeded any funding provided by miners from operations," he said.

Seyffart added: "So even if it does have an impact, it seems to me unlikely to be a huge impact."
That’s not to say that the halving won’t be a significant catalyst for long-term liquidity in Bitcoin and ETFs. After all, the success of the ETF appears to be closely tied to the price of BTC and vice versa. The halving may even increase Bitcoin’s appeal as an asset class to institutional investors. “I think the halving will be one of the best things to happen to Bitcoin since the ETF was launched,” said Bob Iacchino, co-founder of analytics firm Path Trading Partners. “At its core is an inflation protection mechanism, and Inflation is picking up."

In fact, the hype surrounding the halving may help bring Bitcoin to the frontlines of many investors looking for alternative assets to hedge against global macro swings.

“The halving happened at a time when people were a little uneasy about hedging risks in Bitcoin,” Lawant said, noting that many investors are starting to pay more attention to how to protect their portfolios from major changes in the global economy. The economy and asset classes with physical ETFs and shrinking supply will have a positive impact on ETF flows”.

Seyffart said this supply shortage could also have a long-term impact on ETF flows, as it would affect Bitcoin’s “permanent marginal supply.” He added that while the marginal supply impact from ETF inflows in the first three months is much higher than what the halving could have, the reduction in BTC supply is “permanent.”

Regardless of the scenario, Anderson said the market may need to prepare for volatility in Bitcoin's short-term trading and perhaps also for post-halving ETF flows. He noted that over the longer term, net fund flows should reach rates similar to those currently seen.