According to industry analysts, the upcoming Bitcoin halving in April is just one factor contributing to the potential for significant gains in the cryptocurrency this year. While the halving will reduce daily BTC production by 450 BTC from the current average of 900 BTC, this supply cut is relatively small compared to the daily fiat flows in and out of crypto exchanges and Bitcoin ETFs. Therefore, overall demand for Bitcoin is seen as a more important factor than tightening supply. Demand for Bitcoin has historically been correlated with global liquidity measures, such as the global broad money supply. The halving is important, but it is just one of many factors that determine the occurrence and timing of a bull market.
Markus Thielen, CEO and head analyst of 10x Research, believes that the current rally in Bitcoin is on par with the bull market peaks of 2020 and 2021. Using quantitative analysis, Thielen has been bullish on the price of Bitcoin since it surpassed its multi-year highs on March 13, 2024. Based on historical price changes and Bitcoin’s recent new highs, 10x Research projects that Bitcoin could reach $77,000 by early April and $99,000 by May 2024. Thielen notes that whenever Bitcoin has made new price breakouts in the past, the price has grown by as much as 189% after 180 days. Historically, Bitcoin has reached its peak nine to 11 months after these breakouts. Therefore, Thielen forecasts that Bitcoin could reach $146,000 between December 2024 and February 2025.
Simon Peters, a crypto analyst at eToro, highlights that the current Bitcoin rally is unique because it is the first time Bitcoin has experienced a parabolic rise and hit a new all-time high before the block reward halving. Peters attributes this breakout to the launch of spot Bitcoin ETFs in the United States. He explains that the demand for Bitcoin is surpassing the new supply, which is different from previous cycles where demand was primarily driven by retail investors. Peters also notes that Bitcoin miners have been actively selling BTC since August 2023, suggesting that they have already been selling into the current rally in preparation for the halving. However, all selling is well bid due to the high demand from spot ETFs.
Li Xing, a financial market strategist at Exness, believes that macroeconomic developments will drive the Bitcoin price this year. In addition to the spot Bitcoin ETF launch, factors such as expectations of a softer monetary policy and lower interest rates in the US and elsewhere could increase Bitcoin’s appeal as an alternative store of value. Geopolitical risks and uncertainties surrounding the US elections may also continue to boost demand for Bitcoin, potentially leading to a sustained bull run in the future.
Bitcoin halvings are programmed to occur once per 210,000 blocks, or roughly every four years, to maintain Bitcoin’s scarcity and counteract inflation. Since its launch in 2009, Bitcoin has gone through three halving events in 2012, 2016, and 2020, reducing the miner incentive from 50 BTC to the current 6.25 BTC. The upcoming halving in 2024 will further decrease the mining reward to 3.125 BTC. Historically, Bitcoin halvings have been associated with post-halving rallies, such as the 3,000% surge in Bitcoin’s price in the 17 months following the 2016 halving, which led to the historic milestone of $20,000 in December 2017.