Bitcoin inflation approaches 0.5%: how BTC's macroeconomic profile is changing
Bitcoin's emission rate has remained below 1% per annum for over two years, and this is no coincidence—it is the result of a deflationary model embedded in the protocol. If current parameters are maintained, in just two years, after the next halving, BTC inflation will drop below 0.5%.
Why is BTC inflation falling?
Unlike fiat currencies, where central banks can uncontrollably expand the money supply, bitcoin's issuance is strictly deterministic. Here, inflation refers not to price growth, but to the rate of increase in the total number of coins. Today, miners receive 3.125 BTC per block, resulting in an annual emission of about 0.8%—significantly lower than that of gold.
The main mechanism for reduction is the halving, which occurs every four years. Since the network's launch, the block reward has dropped from 50 BTC to 3.125 BTC. In the spring of 2028, it will decrease to 1.5625 BTC, and the annual emission will become less than 0.5%. After reaching the limit of 21 million coins, the creation of new BTC will cease entirely.
The key difference between bitcoin and traditional money is mathematical predictability. The emission volumes of dollars or rubles depend on regulators' decisions, whereas the BTC issuance schedule is fixed in code for decades ahead.
Bitcoin vs. M1: A new signal for the market
Alongside the decline in inflation, another important macroeconomic narrative is developing. The ratio of bitcoin's value to the M1 money supply (cash and funds in checking accounts) is confidently breaking through key resistance levels. This indicator removes the distorting effect of the constant expansion of the fiat money supply.
The chart has successfully surpassed historical milestones from 2018 and the prolonged downward trend of 2025. These levels are now being tested by the market from above as support. If this threshold holds, proponents of long-term growth will receive strong confirmation of the upward trend's strength.
The demise of the four-year cycle
From the described picture, one can conclude the gradual demise of the classic four-year cycle. Previously, cycles were directly driven by halvings, but now the emission has become too insignificant. Its next reduction has virtually no direct physical impact on the market balance. Miners have almost no free coins left to sell.
For this reason, global macroeconomic factors come to the forefront: Fed policy, overall liquidity in the system, 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 view: The decline of BTC inflation below 0.5% is not just a technical parameter, but a fundamental shift in the perception of the asset. Bitcoin is becoming less of a speculative instrument and more of a digital analog of gold with a strictly limited supply. However, investors should remember: scarcity alone does not guarantee price growth—the key driver remains demand, which is currently being shaped by institutional players.