Bitcoin inflation drops below 0.5%: what this means for BTC price
For more than two years, the bitcoin emission rate has remained below 1% per year. If the current trend continues, this figure will drop below the 0.5% mark in less than two years. The first cryptocurrency has not seen double-digit annual inflation for over a decade. Today, miners receive 3.125 BTC for each block mined, which corresponds to an annual supply increase of about 0.8% — noticeably lower than that of gold.
At the same time, a second important macroeconomic story is unfolding in the market. The ratio of bitcoin's value to the M1 money supply is confidently breaking through key resistance levels. Against this backdrop, the traditional four-year industry cycle is beginning to seem outdated to investors. Let's examine what conclusions should be drawn from these figures.
Why Bitcoin Inflation is Falling
By bitcoin inflation, experts mean not a price increase, but the net rate of growth in the total coin supply. For fiat currencies, on the other hand, inflation always means a decrease in purchasing power, as central banks print money without limits. In the case of BTC, inflation is a strictly technical, pre-programmed network parameter. It is calculated as the ratio of the number of new coins received by miners for blocks to the already issued volume of the cryptocurrency.
The main mechanism for reducing emission is the regular halving. Every four years, the reward for a mined block is cut exactly in half. The next halving in the spring of 2028 will reduce the reward to 1.5625 BTC. Accordingly, the coin's emission will fall below the 0.5% mark. The maximum issuance volume is strictly limited to exactly 21 million coins. After reaching this limit, the creation of new BTC will cease entirely.
The key difference between cryptocurrency and traditional money is its absolute mathematical predictability. The emission volumes of dollars or rubles are determined by central bank leadership, and the printing press can accelerate sharply during economic crises. The bitcoin issuance schedule, on the other hand, is clearly fixed in the code for many decades ahead. However, extremely low emission does not at all guarantee automatic stabilization of market value. In dollar terms, the price of digital gold regularly experiences strong fluctuations. The scarcity of an asset does not mean its purchasing power will automatically remain stable.
Bitcoin vs. M1: What This Means
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 exchange rate 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 that the classic four-year cycle is gradually dying out. Previously, cycles were directly driven by halvings, but now the emission has become too insignificant. Its next reduction has almost no direct physical impact on the market balance. Miners have almost no free coins left to sell. For this reason, global macroeconomic factors are coming to the forefront: the Fed's loose or tight policy, overall system liquidity, and capital inflows into spot ETFs.
My expert conclusion: 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. Bitcoin inflation below 0.5% is not just a technical milestone, but a signal that classic cycles are becoming a thing of the past, giving way to macroeconomics.