Bitcoin inflation drops below 0.5%: the end of the era of cheap coins?
Bitcoin's inflation rate, by which we mean the rate of new coin issuance, has remained below 1% annually for over two years. If current trends continue, this figure will drop below 0.5% in less than two years. Bitcoin has not seen double-digit annual issuance in over a decade. Today, miners receive 3.125 BTC for each block found, corresponding to approximately 0.8% annual supply growth. For comparison, this is noticeably lower than the comparable figure for gold, which stands at about 1.5-2% per year.
Alongside this, another important macroeconomic narrative is unfolding in the market: the ratio of Bitcoin's value to the M1 money supply is decisively breaking through key resistance levels. Against this backdrop, the traditional four-year cycle, which once dictated the rules of the game, is beginning to appear outdated to investors. Let's examine what conclusions the professional community should draw from these figures.
Why is Bitcoin's Inflation Falling?
By Bitcoin inflation, we mean not a price increase, but the net rate of increase in the total coin supply. For fiat currencies like the ruble or dollar, inflation always signifies a decline in purchasing power, as central banks print money without limits. In Bitcoin's case, inflation is a strictly technical, pre-programmed network parameter. It is calculated as the ratio of the number of new coins miners receive for blocks to the already issued volume of cryptocurrency.
The main mechanism for reducing issuance is the regular halving. Every four years, the reward for mining a block is cut exactly in half:
| Stage Year | Block Reward (BTC) | Annual Issuance Rate (%) |
| 2009 | 50 | Network Launch Baseline |
| 2012 | 25 | About 12% |
| 2016 | 12.5 | About 4% |
| 2020 | 6.25 | About 1.8% |
| 2024 | 3.125 | About 0.8% |
The next halving in the spring of 2028 will reduce the miner reward to 1.5625 BTC. Consequently, coin issuance will fall below the 0.5% mark. The maximum supply is strictly limited to exactly 21 million coins. Once this limit is reached, the creation of new BTC will cease entirely.
Bitcoin vs. M1: What This Means for the Market
M1 includes the most liquid financial resources — cash and money in current bank accounts. The current ratio of Bitcoin's value to the M1 indicator shows the coin's price not in dollars, but as a share of this volume. This approach effectively removes the distorting effect of the constant expansion of the fiat money supply. Currently, the chart is successfully overcoming crucial historical thresholds: the strong resistance from 2018 and the prolonged downward trend of 2025 have finally been broken. These levels are now being actively tested by the market from above as support. If this threshold holds, proponents of long-term growth will receive significant confirmation of the strength of the upward trend.
From the described picture, one can conclude the gradual obsolescence of the classic four-year cycle. Previously, cycles were directly dictated by halvings, but now issuance has become too insignificant. Its next reduction has virtually no direct physical impact on the market balance. Miners have almost no free coins left to sell. For this reason, global macroeconomic factors are taking center stage: the Fed's loose or tight policy, overall system liquidity, and capital inflows into spot ETFs. The fewer new coins are issued, the weaker the supply's influence on price dynamics. Ultimately, the asset's value is increasingly determined by pure investment demand.
My Comment: Bitcoin's inflation falling below 0.5% is not just a technical milestone but a fundamental shift. We are witnessing Bitcoin transform from a volatile speculative asset into an instrument with fixed, near-zero issuance. This will inevitably lead to a reassessment of its role in institutional investors' portfolios, especially against the backdrop of the ongoing devaluation of fiat currencies. The four-year cycles are becoming a thing of the past — being replaced by an era of macroeconomic maturity.