Bitcoin inflation is relentlessly declining: by 2028, the issuance will drop below 0.5%.
The digital asset market is entering a new macroeconomic era. For over two years now, Bitcoin's annual inflation rate — meaning the rate of increase in the total coin supply — has consistently remained below the 1% mark. Currently, this figure stands at around 0.8%, and if current trends continue, it could drop below the psychologically important threshold of 0.5% within two years. For comparison, double-digit BTC issuance inflation has not been seen for over a decade.
The key driver of this process is the halving, programmed into the code. Every four years, the block reward for miners is cut exactly in half. Currently, each mined block yields 3.125 BTC. The next reduction, expected in spring 2028, will lower the reward to 1.5625 BTC, which will automatically push the annual issuance below 0.5%.
Why this is not just a technical nuance
Bitcoin inflation is not about price growth, but a purely technical parameter embedded in the protocol. Unlike fiat currencies, whose issuance volume is regulated by central banks and can sharply increase during crises, BTC issuance is completely predictable. The maximum limit of 21 million coins is a hard supply cap that cannot be changed.
However, extremely low issuance alone does not guarantee stable price growth. Bitcoin's price remains subject to significant fluctuations. An asset's scarcity does not automatically mean its purchasing power is preserved. The market is now transitioning from a "halving cycle" to a "demand cycle", where macroeconomic factors — Fed policy, system liquidity, and inflows into spot ETFs — play a much more significant role.
Bitcoin vs. M1: A paradigm shift
Alongside the decline in BTC inflation, another important macroeconomic narrative is unfolding. The ratio of Bitcoin's value to the M1 money supply — the most liquid part of the fiat system — is confidently breaking through key resistance levels. This metric helps remove the distorting effect of constant fiat expansion and assess the asset's true strength. The chart is now successfully surpassing historical milestones from 2018 and 2025, and these levels are being tested by the market from above as support. If this support holds, we will have strong confirmation of the long-term upward trend's strength.
The conclusion from this picture is clear: the classic four-year cycle, rigidly tied to the halving, is gradually becoming a thing of the past. Miners have almost no free coins left to sell, and each subsequent issuance reduction has a diminishing direct physical impact on market balance. Bitcoin's value is increasingly determined by net investment demand, rather than a decrease in supply.
My analysis: We are witnessing a fundamental shift. Bitcoin is ceasing to be a "cyclical asset" and is becoming a "macro asset." For long-term investors, this means the strategy of "buy before the halving, sell a year later" may no longer work. The key driver now is global liquidity, not just an event in the network's code. The market is becoming more mature, but also more dependent on external macroeconomic factors.