Bitcoin inflation drops below 0.5%: what this changes for the market
Bitcoin's emission rate is steadily approaching an all-time low. For over two years now, the annual BTC inflation rate has remained below 1%, and based on the dynamics embedded in the protocol, it is expected to drop below 0.5% within the next two years.
It is important to understand: by Bitcoin inflation, I do not mean price growth, but solely the rate of increase in the total number of coins in circulation. This is a fundamental difference from fiat currencies, where issuance is unlimited and determined by central bank decisions. For BTC, issuance is a strict mathematical parameter coded into the network's protocol for decades ahead.
Currently, miners receive 3.125 BTC for each block found, which corresponds to approximately 0.8% annual supply growth. For comparison, even gold, traditionally considered a safe-haven asset, has a higher annual production growth rate. The next halving, expected in the spring of 2028, will reduce the reward to 1.5625 BTC, and then inflation will fall below 0.5%. After reaching the absolute limit of 21 million coins, issuance will cease entirely.
Paradigm Shift: Why Cycles Are Becoming a Thing of the Past
However, low inflation is not a guarantee of stable prices. In dollar terms, Bitcoin still experiences significant volatility. The scarcity of an asset does not automatically ensure the preservation of purchasing power.
Against this backdrop, I observe another important macroeconomic trend: the ratio of Bitcoin's market capitalization to the M1 money supply (the most liquid fiat funds) is confidently breaking through key resistance levels. This indicator helps neutralize the effect of constant fiat money expansion. The chart has now successfully surpassed historical levels from 2018 and the prolonged downtrend of 2025. If these levels solidify as support, it will be a strong confirmation of a long-term upward trend.
My conclusion: the classic four-year cycle, strictly tied to halvings, is gradually losing its influence. Issuance has become so insignificant that its next reduction has almost no direct physical impact on market balance. Miners have almost no free coins left to sell. Today, Bitcoin's price is increasingly determined not by the supply of new coins, but by pure investment demand — global liquidity, Fed policy, and capital inflows into spot ETFs.