Bitcoin's fourth halving arrives with ETF demand reshaping the market

Bitcoin's fourth halving took place on Friday evening, US time, cutting the reward for each new block from 6.25 to 3.125 bitcoin.

This cycle has an unusual feature: the price reached a new record in March, before the halving. In previous cycles, highs came many months after the event. Many analysts link the earlier rally to demand from the spot bitcoin ETFs that launched in January, which have attracted significant inflows.

Miners face a tighter environment. Their block rewards have been cut in half, and the difference must be made up by higher prices, higher transaction fees or greater efficiency. Several publicly listed mining companies have been upgrading equipment and seeking cheaper power. Some have explored using their facilities for data centres serving artificial intelligence.

Transaction fees spiked around the halving, partly due to activity linked to new token standards launched on the network. Points to consider:

• Past halvings have been followed by rising prices, but the sample is small
• ETF flows can now amplify or offset trends in either direction
• Weaker miners may be absorbed by larger ones, concentrating the industry

The halving also comes in a changing political context. Crypto has become a talking point in the US election campaign, and the industry is lobbying for clearer rules.