Bitcoin has achieved a new record high this week, sparking discussions among analysts and investors about the potential peak of this ongoing price surge.
The foremost cryptocurrency globally has surged by over 70 percent since the beginning of the year, surpassing 70,000 for the first time in its decade and a half existence. This climb follows a remarkable increase of more than 150 percent last year, propelling it from under 17,000 at the onset of 2023.
The surge in price has been driven by a fresh wave of institutional investors entering the market subsequent to the approval of the inaugural bitcoin spot exchange-traded funds (ETFs) by the US Securities and Exchange Commission.
Of notable significance, as highlighted by certain crypto market analysts, is the imminent occurrence of the ‘halving’ event, which will halve the rewards for cryptocurrency mining.
Set to occur on 19 April, previous halving events have historically heralded record-breaking surges. Taking place approximately every four years, the reduction in supply is considered by some as a pivotal factor in bitcoin’s cyclical price patterns.
A prominent price forecasting model that leverages halving cycles as its foundation is the Stock-to-Flow (S2F) model devised by the pseudonymous Dutch analyst PlanB.
Initially introduced in 2019 ahead of the prior rally, the apparent precision of the S2F model has garnered PlanB nearly 2 million followers on X (formerly Twitter).
Following the price decline subsequent to the peak in 2021, bitcoin briefly dipped into the lower thresholds of the S2F model. However, reflecting on the current price surge, PlanB stated that his S2F model “is back… like clockwork”.
The upper bounds of PlanB’s model indicate a price for bitcoin well exceeding \(100,000 in this cycle, a projection that other analysts are increasingly considering realistic. Ultimately, PlanB posits that bitcoin’s inherent scarcity – with only 21 million bitcoins slated to ever exist – could position it to rival gold’s \)14 trillion market cap, potentially driving its price tenfold higher than its current levels.
With the recent price upswings, it is becoming commonplace among cryptocurrency market observers to anticipate bitcoin breaching the six-figure mark in 2024. This milestone is now merely a 40 percent surge away, prompting speculation about the potential upper limit.
“Considering the technical outlook, the all-time high is within reach, with the psychological barrier of \(80,000 potentially serving as a future resistance level,” remarked Lukman Otunuga, a senior market analyst at the online trading broker FXTM. Otunuga’s firm discovered that the average price forecast from its sources stood at \)123,056.
“Beyond this threshold, lies uncharted territory. With the average BTC price projection of $123,056, the cryptocurrency would need to rally a further 60 percent from its current levels. While the timeline is uncertain, this scenario remains plausible given the recent price surges.”
In tandem with these optimistic predictions are speculations about the timing and extent of bitcoin’s potential downturn.
Historical price surges in 2013, 2017, and 2021 were followed by significant declines from those peaks, with drops of 83 percent, 84 percent, and 77 percent respectively.
“The volatile nature of cryptocurrencies persists, underscoring the speculative nature of these investments,” noted Andrea Barbon, a finance professor at the University of St. Gallen in Switzerland.
“As the landscape evolves, driven by technological advancements and regulatory shifts, investors are reminded of the delicate balance between promising rewards and substantial risks.”