Institutional investors’ strong desire to purchase new Bitcoin exchange-traded funds (ETFs) and Bitcoin’s history of significant outperformance during the supply-halving event are believed to be the primary factors behind the cryptocurrency reaching new record highs in 2024.
The Bitcoin halving, which occurs every four years and reduces miner block rewards by 50%, has historically been associated with bull markets. The price of Bitcoin has shown a parabolic uptrend and reached its peak in the months following the halving. The next halving is approximately 30 days away and will decrease block rewards from 6.25 BTC to 3.125 BTC.
Past Bitcoin halvings have had a significant impact on the price of BTC. The expectations of reduced supply and increasing demand have led to exponential price growth and positive market sentiment. One consistent observation from previous halvings is that the price of Bitcoin was lower one month before each halving compared to the price at the time of the halving.
For example, during the first halving in November 2012, Bitcoin was priced at around $12. By November 2013, it had surged to a peak high of $1,242, reflecting a more than 10,000% increase. The second halving occurred in July 2016, and Bitcoin’s price reached a previous all-time high of approximately $19,785 by December 2017. At the time of the third halving in May 2020, Bitcoin’s price was $8,730, which then skyrocketed to nearly $69,000 by November 2021.
The reduced supply entering the market combined with constant or increasing demand tends to drive up the price of BTC. The decrease in the supply issuance rate highlights Bitcoin’s scarcity, which can stimulate demand and subsequently increase its price. Additionally, the halving event attracts attention to the crypto industry, drawing in new investors and driving increased trading activity.
Crypto analyst Rekt Capital has analyzed the “5 Phases of The Bitcoin Halving” based on historical price action to predict what may occur before and after the upcoming halving event. These phases include the prehalving period, prehalving rally, prehalving retrace, reaccumulation, and the final phase of a parabolic uptrend, where BTC price experiences exponential growth and reaches new all-time highs.
While historical price action may not necessarily repeat itself in the future, the anticipation of a bull market may encourage investors to increase their capital flows into the asset. Some analysts believe that BTC’s price could reach the coveted $100,000 mark, especially after surpassing its previous all-time high in 2021 before the halving. However, others argue that the halving has already been factored into the price.
Analysts at Bitfinex expect that the strong demand driven by US spot Bitcoin ETFs will help propel BTC to surpass its current peak above $69,000. However, it is worth noting that Bitcoin’s price action this year has deviated from previous halving cycles, with BTC breaking its previous all-time high in March and setting new record highs.
Renowned trader Peter Brandt predicts that Bitcoin could reach $150,000 by Q4 2025 based on its performance. PlanB, a pseudonymous quantitative analyst, believes that the bull market began on March 1 after an accumulation period and has shared a chart suggesting a positive outlook for BTC’s price.
Bitcoin mining experts also express optimism about Bitcoin’s price after the halving. They anticipate short-term volatility due to supply shock and reduced inflation rate, similar to previous halving events.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and analysis before making any investment decisions.