According to industry analysts, the upcoming Bitcoin halving in April will only be a small factor contributing to the cryptocurrency’s potential gains this year. While the halving will reduce daily BTC production, the amount of supply cut is insignificant compared to the daily fiat flows in and out of crypto exchanges and Bitcoin ETFs. Overall demand for Bitcoin is a more significant factor than the tightening supply. Demand for Bitcoin has historically been correlated with global liquidity measures, such as the global broad money supply. The halving is just one factor among many that determine the occurrence and timing of a bull market. The current rally in Bitcoin is comparable to the bull market in 2020 and 2021, which initially peaked in April 2021.
Based on historical price changes and Bitcoin’s recent new highs, research suggests that Bitcoin could reach $77,000 by early April and $99,000 by May 2024. Each time Bitcoin made new price breakouts in the past, the price could grow as much as 189% after 180 days. Historically, Bitcoin would top after nine to 11 months following the breakouts. It is projected that Bitcoin could reach $146,000 between December 2024 and February 2025, nine to 11 months following the breakout in March 2024.
The current Bitcoin rally is unique because it is the first time Bitcoin has posted a parabolic rise and hit a new all-time high before the block reward halving. The launch of spot Bitcoin ETFs in the United States has been a significant driver of this breakout. The demand for Bitcoin is surpassing the new supply, which has never happened before. Previously, demand was mainly driven by retail investors, but the ongoing cycle is expected to be more institutional. Bitcoin miners have been actively selling BTC since August 2023, likely in preparation for the upcoming halving.
Macroeconomic developments, such as expectations of a softer monetary policy and lower interest rates, could also boost Bitcoin’s appeal as an alternative store of value. Geopolitical risks and uncertainties surrounding the U.S. elections may also contribute to increased demand for Bitcoin. Bitcoin halvings occur approximately every four years and are designed to maintain Bitcoin’s scarcity and counteract inflation. The previous halvings have been associated with post-halving rallies, with Bitcoin reaching a historic milestone of $20,000 in December 2017 after the 2016 halving.