Crypto analyst PlanB, who is perhaps most well known for his stock to flow model which predicts Bitcoin (BTC) will have a major rally this year due to the block halving, has estimated that $400 million has been invested into Bitcoin (BTC) on average every month since October 2017.
Essentially, in October 2017 the Bitcoin (BTC) price was $7,000, roughly the same as it is now. Simultaneously, miners have been generating 1,800 Bitcoins (BTC) per day, worth around $13 million. Assuming that Bitcoin (BTC) miners dump all of their coins each day, this means $400 million has to be invested into Bitcoin (BTC) every month on average to keep the price supported at $7,000.
It must be emphasized that this is an assumption, and some Bitcoin (BTC) miners could be HODLING their coins and not dumping them. However, it is not that bad of an assumption either, since miners generally have to dump their coins to pay for operating expenses and to realize their profits.
Another caveat is that in a free market the price is set at whatever people are willing to buy or sell at, and doesn’t necessarily have to be completely correlated with how much Bitcoin (BTC) people are buying or selling.
PlanB expands on his theory, by saying that after the block halving only $200 million of investment would be needed per month to support the price of Bitcoin (BTC) at $7,000, and therefore if the $400 million of investment per month on average continues there will be a big rally.
Although this theory depends on a lot of assumptions, it does reveal how the block halving could cause a major rally, since selling pressure from miners will be drastically reduced.