Bitcoin issuance drops to 0.5%: a new era of scarcity and the fading of cycles
Bitcoin's inflation rate, by which we mean solely the rate at which new coins are created, has remained below 1% per annum for over two years. Miners currently receive 3.125 BTC for each block found, corresponding to an annual issuance of about 0.8%. For comparison, this is noticeably lower than gold, and certainly lower than any fiat currency.
If current rates are maintained, in just two years, after the next halving in the spring of 2028, the block reward will drop to 1.5625 BTC, and the annual inflation rate will fall below the 0.5% mark. This is an all-time low, making Bitcoin one of the scarcest assets in the world. Double-digit issuance rates have not been seen for over a decade.
Why Inflation is Falling: The Math of Halving
The main mechanism for reducing issuance is the halving, which occurs every four years and precisely halves the miners' reward. Look at the dynamics:
- 2009: 50 BTC per block — the network's initial launch.
- 2012: 25 BTC — annual issuance around 12%.
- 2016: 12.5 BTC — around 4%.
- 2020: 6.25 BTC — around 1.8%.
- 2024: 3.125 BTC — around 0.8%.
The next halving in 2028 will reduce the reward to 1.5625 BTC, pushing issuance below 0.5%. The maximum supply is strictly capped at 21 million coins — once this limit is reached, the creation of new BTC will cease entirely.
The key difference between Bitcoin and fiat money is absolute mathematical predictability. The issuance volumes of dollars or rubles are determined by central bank decisions, which can sharply accelerate the printing press during crises. Bitcoin's issuance schedule, on the other hand, is fixed in code for decades ahead.
Bitcoin vs. M1: A New Look at Value
Alongside the decline in inflation, another important macroeconomic narrative is developing in the market. The ratio of Bitcoin's value to the M1 money supply (cash plus checking account funds) is confidently breaking through key resistance levels.
This indicator helps remove the distorting effect of the constant expansion of the fiat mass. The chart has now successfully overcome crucial historical thresholds — the 2018 resistance and the prolonged 2025 downtrend. These levels are now being actively tested by the market from above as support. If this threshold holds, long-term growth proponents will receive significant confirmation of the strength of the upward trend.
The described picture suggests the gradual fading of the classic four-year cycle. Previously, cycles were directly dictated by halvings, but now issuance has become too insignificant. Its further reduction has almost no direct physical impact on the market balance — miners have almost no free coins left to sell.
Global macroeconomic factors are taking center stage: Fed 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 net investment demand.
My analysis: Bitcoin's inflation falling below 0.5% is not just a technical nuance, but a fundamental shift. The asset is entering a phase where its scarcity becomes absolute, and price formation is increasingly detached from mining costs and halving cycles. For long-term holders, this is a signal that Bitcoin is finally transforming into "digital gold" with minimal new supply, where the key driver remains global liquidity and institutional demand.