July 11th What did the Block Chair highlight about Bitcoin’s security budget?

Blockchain Explorer and Analytics Firm Blockchair recently launched its budget. Day is a website designed to raise awareness and encourage discussion about the decline in Bitcoin security budget. This is an issue that could threaten the long-term viability of your network. The platform presents a simplified live visualization so that users can understand how Bitcoin security is funded through a combination of block subsidies and transaction fees. With block subsidies halving every four years and the fare market still undeveloped, the budget underscores the increased risk of insufficient mining incentives, which could expose the network to a potential 51% attack. The site also explores potential responses, ranging from scaling solutions to controversial proposals such as changes to 21 million BTC supply caps. By addressing widespread misconceptions such as relying on Hashrate’s growth and optimistic price forecasts, Blockchair aims to promote more informed, solution-oriented debates about Bitcoin’s future security.

How does Bitcoin security model actually work?

Bitcoin’s security model is based on a distributed proof of job (POW) consensus mechanism. This mechanism involves miners spend computational energy to validate transactions and protect the network. This model relies on economic incentives to adjust participants’ interests and to block malicious behavior. Miners compete to solve the encryption puzzle, and those who first find a valid solution will win the right to add new blocks to the blockchain. This process requires significant energy consumption and hardware investment, making attacks like double spending and chain reorganization economically unfeasible, unless the attacker controls most of the total network hashrate. The difficulty adjustment algorithm ensures that blocks are generated every 10 minutes regardless of changes in network hash power, maintaining a stable cadence of predictable publication and transaction processing.

A “security budget” refers to the total amount of value paid to a miner to encourage this ongoing work. These are two important factors: block subsidies and transaction fees. Block subsidies are new bitcoins created in each block, starting at 50 btc, half every four years (currently at 3.125 BTC per block as of half of 2024). Transaction fees are paid by users to include transactions in blocks, and become more and more important over time as subsidies decrease. Together, these rewards must remain economically attractive enough to maintain participation of miners. If security budgets are below what miners need to cover operational costs, some may drop networks, reduce hashrates, and make them more vulnerable to system attacks.

Bitcoin’s long-term security model predicts that the final face will be eliminated from block subsidies approaching zero around 2140. As a result, the network ultimately relies entirely on transaction fees to maintain its security budget. This shift has made the ongoing high demand for block space and healthy rate markets very important. If trading volumes and fees are too low in the unsubsidized future, Bitcoin could struggle to maintain sufficient hash power unless alternative mechanisms (such as optional sidechains and off-chain solutions such as lightning networks) generate sufficient economic activity to maintain base tier fees. Critics have questioned whether fees alone are sufficient to maintain robust security, but supporters argue that rarity, adoption and economic utility support a naturally viable fee market.

An important feature of this model is its game-theoretical resilience. Miners are encouraged to act honestly, as attacking networks is not only expensive, but also undermine trust in the system and undermine the value of the attacker’s own Bitcoin holdings and mining infrastructure. Furthermore, as Bitcoin’s fixed supply schedules have declined over time the security budget issuance component, the long-term viability of the network depends on demand-driven transaction fees and ongoing technology adaptation. Therefore, Bitcoin’s security model is not static, but a dynamic equilibrium of economic incentives, user behavior and technological innovation, all of which need to continue evolving in tandem to maintain network integrity.

What is a budget? Why do you claim that Bitcoin’s security model is risky?

Blockchair’s newly launched website, Buldge.day, serves as educational resources and warning signals for bitcoin security budgets that decrease by 50% every 210,000 blocks when herbs occur, or block subsidies, which can become a structural issue with a long-term impact on network history. The site provides an explicit language breakdown of how Bitcoin’s POW model relies on miners’ compensation through block subsidies and transaction fees, and what happens when its financial incentives become weaker. Budget fills the budget as blocks’ rewards are halved every four years and trading fees cannot fill the gap. Day argues that Bitcoin could ultimately face situations where its economic defenses no longer thwart attacks such as double spending, trading censorship, or network stalling. The concern is not theoretical. It is based on measurable trends and declines in miners’ revenue compared to the overall value of Bitcoin.

At the heart of the site’s discussion is the decline in block subsidies, which now drops to 3.125 BTC per block, eventually reaching zero around 2140. Theoretically, this reduction subsidy should be offset by a robust fee market, but it suggests that no data has occurred. As of early 2025, trading fees have contributed only a small portion of miners’ total revenue, and fee levels remain low as users are motivated to seek cheaper alternatives in other chains due to limited block space. The budget warns that if fees and revenue from rising BTC prices do not outweigh the decline in subsidies, there may be fewer miners who may feel they are worthy of securing a network. This reduces hash power, lowers the cost threshold for successful 51% attacks, and weakens the deterrent that underpins Bitcoin’s unreliable design.

Budget outlines some potential paths, ranging from technical scaling to more fundamental protocol changes. The first option, on-chain scaling, includes increasing block size, reducing block time, or incorporating optional block extensions. These changes could potentially increase transactions per block, allowing individual fees to be reduced while maintaining appropriate total miner compensation. More controversial proposals include shifting Bitcoin consensus mechanisms through mechanisms such as tail ejection and demerging to alternatives such as proof of fact and alternatives that implement continuous inflation. However, these approaches raise philosophical and practical concerns, such as violations of Bitcoin’s fixed supply principles and increased risk of centralization. This site presents these as trade-offs that need to be critically evaluated, rather than as approval.

A key part of the budget is challenging the widely held assumptions about Bitcoin’s future security. The site warns that hashrates alone will not guarantee security, especially when it comes to cheap energy or hardware. It also counters the idea that future Bitcoin price increases will automatically resolve the issue, allowing miners to be paid with BTC, potential attackers to be funded with BTC, and FIAT’s negative predictions are made regardless of network security. The conclusion is direct but measured. Without meaningful adaptations and reforms, Bitcoin’s current incentive model may not be sufficient to secure a chain in the long term. The site does not claim to provide a final answer, but rather seeks to raise technical and economic issues that are below the debate despite its fundamental importance.

Is the block chair problem trolling or is the conversation worth it?

The team behind the budget deserves recognition by opening conversations that have long been preferred over side steps by many of the Bitcoin community. Addressing the long-term viability of Bitcoin security budgets is not an easy task, especially when challenging the general narrative of self-sufficiency and inevitable success. Rather than promoting self-satisfaction, the project highlights the true risks associated with reduced incentives for miners and the assumption that rising prices or speculative demand will naturally resolve all structural problems. By presenting data in a clear and accessible way, the budget invites the community to be honest with these concerns. This requires both technical insight and a willingness to question legitimacy.

When Bitcoin was introduced, it was envisioned as a peer-to-peer electronic cash system, allowing for large amounts of daily trading at a minimum fee. Early usage reflects its purpose, with microtransactions and direct payments playing a central role. But over time the story changed. Faced with intense internal debate about scalability limitations and block size, Bitcoin’s dominant use cases have evolved to that of “digital gold.” This transformation has provided certain benefits such as broader institutional acceptance and enhanced and valuable appeals, but also produced unintended side effects. The decline in Bitcoin usage has weakened the development of a sustainable fee market that could ultimately replace block subsidies. This dynamic poses a structural challenge to the long-term integrity of Bitcoin’s work proof system. Relying on rising transaction fees to compensate for falling subsidies envisages continuous, large-scale use of the baseline. However, when most owners are investors who rarely move coins, and those seeking low-cost move to a tier 2 solution or alternative blockchain, the on-chain activity needed to support miners’ incentives may not be realized.

With the perceived impact on network fees and differences from Bitcoin’s original purpose, unorthodox tokenization protocols such as ordinal numbers and runes have sparked major controversy within the Bitcoin community. These protocols allowed the inscription and mint of digital assets on the Bitcoin blockchain, and in many cases, trading fees have skyrocketed during periods of high activity. For many everyday users, this rendered Bitcoin is temporarily unavailable, making basic transactions prohibitively expensive. Critics, especially the longtime Bitcoiner, dismissed these tokens, messed up the network and misused block space for speculative purposes. However, from the perspective of miners operating at thin razor margins in an increasingly competitive environment, these fee spikes needed so much revenue that some miners began offering private mempools and out-of-band relay channels directly to tokenization projects, such as marathon slipstreams. As block subsidies have declined over time, the additional revenue generated by ordinances and rune-driven demand provided temporary economic reprieves, highlighting the growing tension between Bitcoin’s evolving use cases and its reduced security budget.

Several voices from the Bitcoin development community, including Peter Todd, have expressed concern about the issue. Todd is openly debating the possibility that hard forks introducing modest, continuous inflation, such as tail release, or that it may be necessary to ultimately protect the network as subsidies approach zero. Such a proposal is naturally controversial as it challenges one of the fixed 21 million btc supply caps, one of Bitcoin’s most sacred design principles. However, raising these options should not be seen as heresy, but as a responsible effort to maintain the long-term viability of the system. The budget does not specify a specific solution, but it should be praised for bringing these perspectives to the surface. Ignoring the potential discrepancies between current usage patterns of Bitcoin and its future security model, the network will not give favor. By choosing to take difficult questions seriously, the leadership behind the budget ensures that Bitcoin evolution is guided by informed deliberations rather than blind faith.

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As Bitcoin (BTC) continues its climb toward its all-time high (ATH), several technical patterns and time-based indicators have turned bullish, suggesting the flagship cryptocurrency may be on the verge of parabolic gains in the coming weeks.

These Indicators Hint At Parabolic Rally For Bitcoin

In an X post published today, crypto analyst Jelle noted that BTC has broken out of a bullish pennant and completed a successful retest – signaling its readiness for a new ATH. The analyst added that the bullish pennant projects a potential target of $150,000.

For the uninitiated, a bullish pennant is a continuation pattern that forms after a sharp upward move, followed by brief consolidation within converging trendlines. A breakout above the pattern typically signals a continuation of the uptrend.

Fellow crypto analyst CryptoGoos highlighted another bullish structure – the inverse head and shoulders pattern. They shared the following weekly BTC chart and stated, “this is not the time to flip bearish on Bitcoin.”

To explain, while a normal head and shoulders pattern is bearish for the underlying asset, an inverse variation of the pattern is bullish. The pattern is characterized by three troughs – two shallow shoulders on either side of a deeper head – followed by a breakout above the neckline.

Crypto trader Merlijn The Trader drew parallels between the current BTC cycle and the 2013–2017 run. The analyst shared the following chart showing that BTC has completed an ABC pattern on the weekly timeframe, followed by a prolonged consolidation and a successful breakout retest.

Meanwhile, seasoned analyst Titan of Crypto shared an interesting correlation between BTC cycles and US elections. Historically, BTC has topped approximately 53 weeks after a US election.

Since the last US election was in November 2024, it’s been 36 weeks. This suggests that a BTC peak could arrive within the next 17 weeks if historical patterns hold.

BTC Exchange Reserves Drying Up

On-chain data also paints a bullish picture. According to a recent CryptoQuant Quicktake post by contributor Chairman Lee, BTC exchange reserves have fallen to a multi-year low of 2.4 million BTC.

Declining exchange reserves typically signal a tightening supply, which can precede major bullish moves as demand outpaces available BTC. The analyst noted that the current trend mirrors the 2020–2021 bull cycle.

That said, not all indicators are bullish. The TD Sequential recently flashed a warning signal, hinting at a possible correction that could push BTC as low as $40,000. At press time, BTC trades at $109,232, up 0.9% in the past 24 hours.

Featured Image from Unsplash.com, charts from X, CryptoQuant, and TradingView.com

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Bitcoin was soaked in $103,450 yesterday, wiping out roughly $1 billion of utilized bets over the past 24 hours. Many traders quickly sold, but the fall was short-lived.

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Bitcoin found its foothold and was back at $104,400 by the time this report was filed. A recent analysis by Crypto Researcher Klarch shows that the pullback is expected and could only be a pit stop before another run to a new high.

Repeated cycle pattern

Based on inspections by Klarch, Bitcoins tend to follow familiar passes after half of each. A year later, it rose by about 280% from half of 2016. Half of 2020, it jumped about 550% in 367 days.

Currently, Bitcoin has only risen by about 70% in 416 days from the previous half. Klarch points out that in past cycles these numbers have increased speed after slow start. So, he says there is still room for more growth.

The Bitcoin cycle is the same…

– 2016, $ BTC Half later, it increased by 280% after 365 days
– 2020, $ BTC Half later, it increased by 550% after 367 days
– Now 416 days after harving $ BTC +70% – Future growth…

History repeats, $BTC is the near future existence pic.twitter.com/wshx4egwbc

– klarck (@0xklarck) June 5th, 2025

These percentages are important as they suggest that they may come next. As Bitcoin history repeats itself, the best profits could be turning the corner. Information from blockchain data also supports this.

For example, trading volumes and on-chain addresses have reached new highs over the past few weeks. This fits the pattern described by Klarch. After the first ascent, there are often larger gatherings.

Signs of the next surge

Bitcoin set a record of $112,100 on January 20th, extending it to a maximum of $111,980 on May 22nd. He sees those movements as part of accumulation of cycles, not as climaxes. Based on his chart work, each cycle has multiple tops before it finally reaches the top.

Klarch did not provide an exact date for the new peak, but he suggested that Bitcoin had not hit the ceiling yet. He points out that a string of all-time highs usually occurs when sentiment is still positive. Prices often accelerate rapidly when traders feel FOMO.

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Demand and liquidity operating prices

The liquidity poured into the crypto market was an important topic. Klarch says stable purchases from the institution and US Bitcoin spot ETF have led to bitcoin scarcity in exchanges.

Michael Saylor’s strategy and other big-budget players continue to buy, and supply drops. Based on the diagram presented by Klarch, this trend can raise Bitcoin to around $180,000. This is about 75% more than current levels.

Asset Manager Vaneck shares similar goals. It makes Clark’s outlook feel like the only voice. If big money continues to move and retail interest is high, Bitcoin prices can only go up. However, a pause in ETF inflows and sudden changes in global markets could change that narrative.

Imagen featured images, TradingView charts

In an X post shared earlier today, crypto analyst Ali Martinez noted that Bitcoin (BTC) is flashing a buy signal. Another analyst, Titan Of Crypto, highlighted that BTC is currently trading in a reversal zone – suggesting that the leading cryptocurrency may soon experience a shift in price momentum.

Bitcoin Flashes Buy Signal Amid Market Pullback

Compared to the price action seen last year, Q1 2025 has been relatively sluggish for digital assets. On a year-to-date (YTD) basis, BTC is down nearly 30%, dropping from around $97,600 on January 1 to approximately $78,000 at the time of writing.

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Following yesterday’s tariff-induced crypto market pullback –  which wiped over $140 billion from the total crypto market cap – BTC is now beginning to show early signs of strength. Martinez emphasized that Bitcoin is flashing a weekly TD Sequential buy signal.

For the uninitiated, the weekly TD Sequential buy signal is a technical indicator that suggests a potential trend reversal or buying opportunity after a prolonged downtrend. It typically appears when a specific 9-count pattern completes, signalling that selling pressure may be exhausted and a price rebound could be near.

Meanwhile, fellow crypto analyst Titan Of Crypto pointed out that BTC is trading within a potential reversal zone. He noted that as long as BTC remains above the 38.2% Fibonacci retracement level, the broader uptrend would remain intact.

Additionally, Titan highlighted that BTC’s Fair Value Gap (FVG) at $80,000 has now been filled – a development that further boosts the case for a potential trend reversal or significant price action at current levels.

To explain, an FVG is a price imbalance on a chart, often created by a strong move in one direction, where little to no trading occurred. It indicates a potential area where price may return to “fill the gap” before continuing its trend.

Recent BTC Price Drop Not Out Of The Ordinary

Another crypto analyst, Master Of Crypto, remarked that although the recent BTC price decline may have alarmed some investors, it’s well within the bounds of historical norms. The analyst pointed out that BTC is currently trading about 26.6% below its all-time high (ATH) of $109,500.

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However, this decline is still less severe than previous market cycle drawdowns, such as 83% in 2018 and 73% in 2022. The analyst added that besides the price pullback, BTC’s weekly Relative Strength Index (RSI) has also been trending down for five weeks.

That said, technical indicators suggest that it may take more time before BTC sees a meaningful shift in price momentum. For instance, the top cryptocurrency recently flashed a death cross, a bearish pattern that could signal further short-term downside. At press time, BTC trades at $78,543, down 0.3% in the past 24 hours.

Featured image from Unsplash, Charts from X, and TradingView.com