Bitcoin inflation drops below 0.5%: the end of the miner era and a new driver for BTC growth
For over two years, Bitcoin's annual inflation rate has remained below 1%. If current trends continue, this figure will drop below 0.5% in less than two years. For comparison, double-digit issuance was last observed more than a decade ago. Today, miners receive 3.125 BTC for each block found, representing approximately 0.8% annual supply growth. This is notably lower than the comparable figure for gold, which historically fluctuates around 1.5–2%.
Simultaneously, a second important macroeconomic narrative is unfolding: the ratio of Bitcoin's market capitalization 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Against this backdrop, the traditional four-year cycle, which once dictated the rules of the game, is beginning to seem outdated to investors. Let's examine what conclusions can be drawn from these figures for the "buy and hold" strategy.
Why Bitcoin's Inflation Inevitably Declines
By Bitcoin inflation, I mean not the price increase, but the net rate of growth in the total coin supply. Unlike fiat currencies, where central banks print money without limits, BTC issuance is a strictly technical, pre-programmed network parameter. Every four years, the halving reduces the block reward by exactly half:
- 2009: 50 BTC — initial launch
- 2012: 25 BTC — ~12% annually
- 2016: 12.5 BTC — ~4%
- 2020: 6.25 BTC — ~1.8%
- 2024: 3.125 BTC — ~0.8%
The next halving in spring 2028 will reduce the reward to 1.5625 BTC, and issuance will fall below 0.5%. The maximum total supply is strictly capped at 21 million coins. After reaching this limit, the creation of new BTC will cease entirely. The key difference between cryptocurrency and traditional money is absolute mathematical predictability. The issuance volumes of dollars or rubles are determined by central bank decisions, while Bitcoin's issuance schedule is fixed in code for decades ahead.
Bitcoin vs. M1: A New Indicator of Strength
M1 includes the most liquid financial resources: cash and money in checking accounts. The ratio of Bitcoin's value to M1 shows the coin's price not in dollars, but as a share of this volume. This approach removes the distorting effect of constant fiat expansion. 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. If this level holds, proponents of long-term growth will receive substantial confirmation of the upward trend's strength.
Expert Conclusion: The reduction of Bitcoin's inflation to 0.5% is not merely a technical fact, but a fundamental shift. Issuance becomes so insignificant that halvings cease to have a direct physical impact on market balance. Miners have almost no free coins left to sell. Global macroeconomic factors come to the forefront: 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 pure investment demand. The classic four-year cycle is fading into the past — replaced by an era of macroeconomic positioning.