A looming reduction in bitcoin’s (BTC-USD) supply growth, known as the halving event, is poised to boost the price of the highest-profile cryptocurrency to over $115K in 2024, crypto tax-reporting firm CoinLedger said in a recent study.
A year after the past two halvings – there have only been three so far – the price of bitcoin (BTC-USD) surged by an average of 400%, according to the study, which based its $115K price prediction on whether the token is at $69K when it halves in April.
A bitcoin (BTC-USD) halving occurs when miners’ (Marathon Digital (NASDAQ:MARA), Riot Platforms (NASDAQ:RIOT), etc.) reward is slashed in half, essentially reducing the rate at which new tokens are created by 50%. This means that the splitting, which happens every four years, lowers the number of new bitcoins that can be bought. If demand stays the same or goes up, this could cause the price of the coin to go up.
The first mining reward was 50 bitcoins (BTC-USD). On Nov. 28, 2012, the first-ever halving, the reward was cut in half to 25. From there, the reward was lowered to 12.5 after the July 9, 2016 halving, and then to 6.25 on May 11, 2020. The next halving, at some point in April, will see the block reward fall to 3.125.
In 2016, the price of bitcoin (BTC-USD) jumped to $986 six months after the halving, a 51.6% increase from $650 on the day of the event, the report said. Similarly, the price rose 82.3% to $15,702 six months after the 2020 halving.
That’s an average increase of 67.7% six months after a halving event. “If a similar pattern were to follow, then Bitcoin could rise to a high of $115,733,” CoinLedger estimated. “Although this seems like a high estimation Bitcoin has shocked people before in past bull runs.”
Not everyone is bullish on the halving catalyst. J.P. Morgan analyst Nikolaos Panigirtzoglou thinks bitcoin (BTC-USD) could drop to $42K after the event, a “level we envisage bitcoin prices drifting towards once bitcoin-halving-induced euphoria subsides after April.”
Speaking of euphoria, bitcoin (BTC-USD) briefly topped $70K on Friday to claim new territory, leaving the token up more than 50% this year and up more than 200% Y/Y. There have been a lot of strong investments into spot bitcoin exchange-traded funds and a lot of excitement about the upcoming halving. People also think that the Federal Reserve and other major central banks will start cutting interest rates in a few months, which has helped the rise.
But SA analyst D Lombardo warned investors that bitcoin is at a mid-cycle peak and a near-term correction is likely, citing bearish on-chain metrics and giddy-level sentiment.
Other bitcoin miners: HIVE Digital Technologies (HIVE), Hut 8 (HUT), Bitfarms (BITF), Bit Digital (BTBT), CleanSpark (CLSK), Core Scientific (CORZ).