Bitcoin has seen a significant surge in price recently, climbing to $87,378, and while some have attributed this to political events like Donald Trump’s election victory, experts are largely focusing on another key factor: a supply shock following Bitcoin’s halving event. According to Jesse Myers, co-founder of Onramp Bitcoin, while a Bitcoin-friendly administration may have played a role, the primary reason for this surge is the reduced supply of new Bitcoin entering circulation, creating a scarcity that drives up demand.

The Halving and Supply Limitation

Bitcoin’s halving event in April 2024 reduced the block reward from 6.25 BTC to 3.125 BTC. This means that the reward miners receive for confirming transactions was cut in half, making it more challenging to mine new Bitcoin. With fewer rewards available, the supply of Bitcoin decreased, creating a supply shock in the market.

Jesse Myers points out that this halving event has caused an imbalance in the supply-demand equation. As demand for Bitcoin has continued to rise, the supply of new coins entering circulation has been reduced, pushing the price higher. Myers explains that price increases are the market’s natural response to restore balance between supply and demand. “Price increases can only stabilize this supply and demand balance,” he notes. While this price surge could potentially lead to market mania or even a bubble, Myers believes it is a natural market cycle, driven by the limited supply and growing demand.

The Effect of Scarcity on Bitcoin’s Value

On-chain analyst James Check compares Bitcoin’s characteristics to gold, emphasizing Bitcoin’s durability and scarcity. He believes that as Bitcoin’s supply continues to tighten, its value will increase, much like how gold is valued as a precious asset. According to Check, Bitcoin’s inherent scarcity is a major factor in its ability to retain value over time. He predicts that these factors will continue to drive Bitcoin’s price upward, as investors look for assets that hold long-term value.

Financial figure Anthony Scaramucci also weighs in on the future of Bitcoin, suggesting that the cryptocurrency is still in its infancy. He expects institutional interest in Bitcoin to grow significantly, which could further fuel its price growth. As more institutional investors enter the market, the pressure on supply will continue to drive prices higher, according to Scaramucci.

Limited Supply and Future Expectations

Experts point out that 94% of the circulating Bitcoin supply is either actively being used or has been lost over time. This leaves around 1.2 million BTC still available to be mined. With a limited supply and growing demand, the price of Bitcoin is under upward pressure. This scarcity is a key factor in driving Bitcoin’s recent rally and suggests that the cryptocurrency will continue to see price increases in the future.

Additionally, the upcoming halving event, expected to take place in 2028, is predicted to trigger another round of price increases due to the further reduction in mining rewards. As Bitcoin’s supply continues to decrease, demand is expected to remain strong, further propelling the asset’s price.

Institutional Interest on the Rise

The increasing institutional interest in Bitcoin is also contributing to the cryptocurrency’s price surge. As more institutional investors enter the market, they bring with them large amounts of capital, which further tightens the available supply. Experts believe that Bitcoin’s growing acceptance in traditional finance and investment circles will lead to continued upward pressure on its price.

Jesse Myers underscores the growing recognition of Bitcoin as a legitimate asset class, especially among institutional investors. He suggests that this institutional demand will continue to drive Bitcoin’s price in the coming months and years.

Conclusion: Bitcoin’s Scarcity Drives Its Surge

The recent surge in Bitcoin’s price can be attributed to a combination of factors, with the supply shock following the halving event playing a central role. As fewer new Bitcoins are mined and institutional demand rises, Bitcoin’s price is expected to continue climbing. With the cryptocurrency’s scarcity becoming a defining factor, experts predict that Bitcoin could reach even higher prices in the future, especially as the market continues to mature.