Considering the historical performance patterns of Bitcoin halving and the current favorable environment, it is expected that the price of Bitcoin in 2024 will reach $60,000 before the halving, fluctuating between $32,000 and $85,000 throughout the year. This article is sourced from the article “Bitcoin halving 2024: Ultimate guide” written by EarnBIT, compiled, organized, and written by 白話區塊鏈.
Table of Contents:
1. Bitcoin Halving Cycle
2. When is the Bitcoin Halving in 2024?
3. Impact on Price: Background of Bitcoin Halving
4. Historical Perspective: Macro Background
Bitcoin Halving in 2024: Searching for Clues from Past Performances
Bitcoin Halving 2024 Predictions: Quickly Returning to $69,000?
Daily RSI
5. Bitcoin Halving 2024 and Spot ETF
6. Predictions for 2025: Bitcoin Price to Reach $150,000 to $200,000 After Halving
7. Rising Transaction Fees and Miner Revenue
8. On-Chain Indicators: Long-term Positive Signs
9. Power Law Corridor
10. Conclusion
In April 2024, Bitcoin will undergo another halving, a biennial event that reduces miner rewards. The evolution of the market structure supports the widely expected uptrend. This halving cycle is fundamentally different from previous ones, and our guide summarizes common price predictions and unique driving factors.
Halving reduces the number of newly minted Bitcoins. This occurs every 210,000 blocks, forming a four-year price cycle. The previous halvings occurred in 2012, 2016, and 2020.
“The total circulation will be 21,000,000 coins. They’ll be generated when a node finds a block, and each four years the reward will be halved. First four years: 10,500,000 coins. Next four years: 5,250,000 coins. Next four years: 2,625,000 coins. And so forth…” – Satoshi Nakamoto, “The Cryptography Mailing List,” January 8, 2009
This event will reduce miner profitability as miners use specialized hardware (Application-Specific Integrated Circuits, ASICs) to process transactions. According to data from CoinDesk, mining a block currently requires a profit of at least $10,000 to $15,000. After the halving, costs may surge to $40,000 per coin.
The reward will be reduced from 50 Bitcoins per block to 6.25 Bitcoins, further reducing to 3.125 Bitcoins on April 19, 2024. You can track the countdown to the Bitcoin halving here.
While scarcity narrative is important, factors other than supply contraction are also at play. In theory, lower inflation should boost demand, but the actual price impact may be limited.
The slower coin issuance rate reduces inflation while ensuring a limited supply of Bitcoins (21 million in total). This non-inflationary nature appeals to cryptocurrency enthusiasts as Bitcoin is not influenced by central authorities or natural reserves like fiat currencies and gold.
The lower reward promotes the health and sustainable development of the network. According to Dig1C0nomist, the annualized energy consumption is 141.46 TWh, equivalent to the entire energy consumption of Ukraine, with a carbon footprint similar to Oman (78.90 Mt of CO2).
Bitcoin is also influenced by factors beyond the speed of supply expansion. These factors include both internal and external driving factors in the blockchain industry: regulation, monetary policies of the Federal Reserve, geopolitics, and more.
According to the Efficient Market Hypothesis (EMH), if all traders are aware of the halving, the effect must already be reflected in the price. However, as Warren Buffett said over 30 years ago, “Investing in a market people believe to be efficient is like playing bridge with someone who has been told what’s in everyone’s hand.”
As Grayscale points out, the change in supply structure is the only certainty. Halving brings Bitcoin closer to its maximum supply, posing challenges for all miners.
In other words, Bitcoin’s scarcity is also programmable and therefore known in advance. Models directly linking it to price increases may have flaws. Otherwise, Litecoin (another cryptocurrency that undergoes halving) would continue to rise after each halving, which is not the case.
Previous halving events were accompanied by emphasizing Bitcoin as an alternative store of value or factors that indirectly benefited it.
In 2012, the EU was experiencing a severe debt crisis. By November 2013, Bitcoin surged from $12 to $1,100.
2016 witnessed a primary coin issuance frenzy with over $5.6 billion flowing into other cryptocurrencies. By December 2017, Bitcoin soared from $650 to $20,000.
In 2020, during the COVID-19 pandemic, inflation concerns escalated. By November 2021, Bitcoin surged from $8,600 to $68,000 and reached a new all-time high of $69,044.77 on November 10. Its recognition as a hedge asset played a significant role.
Past performance does not guarantee future results, and as we have shown, influencing factors extend beyond cryptocurrencies. However, past halving events provide clues to potential scenarios.
Timing of Highs and Lows
In theory, Bitcoin bounces from lows long before the halving, typically around 12-16 months before the event, according to CoinDesk’s data. Pantera’s analysts estimate that bottoms usually occur around 477 days before the halving.
The uptrend continues both before and after the halving. The post-halving uptrend lasts an average of 480 days (until the subsequent peak of the bull market).
This time, the bottom occurred before the expected date (December 30, 2022). It happened on November 10 at $15,742.44.
If history repeats itself, according to Pantera’s communication, the bull market will end in late 2025.
In the past three halving cycles, Bitcoin has seen an increase of over 30% in the first eight weeks. As Marcus Toren, the founder of 10x Research, said, during that period, Bitcoin’s average increase is 32%.
Given the current price of $52,456.77, if the same trend repeats, the price will reach the previous all-time high of $69,000. Toren added that this possibility increases “the closer we get to the Bitcoin halving.”
On February 19, 10xResearch reported that the daily RSI (Relative Strength Index) had surpassed 80. This momentum indicator measures the speed and change of price movements, and when the index reaches 70, it signifies strong upward momentum.
Historically, when the RSI exceeds 80, it indicates that the future increase in the next 60 days will exceed 50%. Bitcoin’s 14-day RSI last reached such a high level in December 2023. As of February 22, it stands at 70.88%.
This year, Bitcoin’s rise has been supported by the adoption of spot Bitcoin ETFs. These trading platforms allow investors to gain exposure to Bitcoin’s investment returns without directly holding Bitcoin, attracting over $5 billion in net fund inflows.
This influx of funds not only supports investor sentiment but also mitigates selling pressure from block rewards (i.e., all newly mined Bitcoins potentially being sold).
According to Grayscale’s calculations, based on the current yield of 6.25 Bitcoins per block, the annual selling pressure amounts to $14 billion (based on a price of $43,000). After the halving in 2024, the total will decrease to $7 billion, requiring less buying pressure to counterbalance selling pressure.
Spot Bitcoin ETFs have absorbed “roughly three months’ worth of potential selling pressure after the halving.” This has been achieved in just 15 trading days.
Due to the expectations of the market, it is typical for the market to rise during the period before Bitcoin halving. As of February 22, 2024, experts and research institutions are generally optimistic, predicting an average price range of $150,000 to $200,000 for Bitcoin in mid-2025.
Bitcoin’s order book liquidity has reached its highest level since October 2023, although still lower than before the FTX crash. Unless demand decreases (contrary to the current situation), the reduction in new Bitcoin supply is bound to boost its price. Some analysts suggest that a new all-time high has already begun.
Bernstein states that the pre-halving behavior reflects the upcoming supply tightening and the growing demand for spot ETFs. The company expects the price to “reach a new all-time high in 2024” and peak at $150,000 in mid-2025.
Anthony Scaramucci, the founder of Skybridge Capital, predicts that Bitcoin will reach a high point of $170,000 or higher in July 2025. In an interview with Reuters in January, he said, “Whatever the price is on halving day in April, multiply it by four, and that’s where it’s going to be in the next 18 months.”
Scaramucci used a conservative starting point of $35,000 (the price at halving) to calculate $170,000. Based on the current price of $52,000, this scenario would push Bitcoin over $200,000.
Meanwhile, according to his long-term estimation, the market value of this groundbreaking cryptocurrency should reach half the market value of gold. This would require the market cap to grow from the current $1 trillion to around $6.5 trillion, an increase of over 6 times.
Skeptics: More Drivers Needed to Reach All-Time Highs
Rachel Lin, co-founder and CEO of SynFutures, states that halving is “unlikely to trigger a broad bull market” unless there are more drivers.Adoption of cryptocurrencies has significantly increased, but “this alone is not enough to bring Bitcoin back to its peak of nearly $69,000, let alone surpass it.” However, due to the US election, local regulatory agencies may reduce their “headline-chasing” behavior at this critical moment. Therefore, there may not be too much negative news in the future to dampen investor enthusiasm for cryptocurrencies. This could pave the way for the next bull market trend.
Factors to Watch in the Short and Medium Term
Halving is a positive factor in the medium term. Peter Henn from CCN summarizes the positive and negative factors that Bitcoin may face in the coming weeks and months.
The growth of institutional adoption is a major positive factor, along with price rebounds and positive technical indicators. However, adverse changes in regulatory policies and the macroeconomic background, such as rising inflation, may affect market sentiment.
Warning factors in the medium term include regulatory policies and other competing cryptocurrencies, including central bank digital currencies (CBDCs). Hacker attacks and other security vulnerabilities can undermine market trust.
In the next 1-2 years, Bitcoin may also rise due to improvements in the Lightning Network and its strengthened position as a store of value.
Bitcoin Halving in 2024 and Miners
As long as there is sufficient economic incentive, miners will continue to protect the security of the blockchain. Therefore, the price of Bitcoin must be high enough to offset the costs during and after the halving period.
Large miners are actively accumulating Bitcoin. According to Taras Kulyk, the founder of SunnySide Digital, “halving has been considered by most companies” because “they have been anticipating and incorporating halving prices into their forecasts for years.”
Meanwhile, miners with higher electricity costs and lower device efficiency may eventually have to shut down their operations, considering their hardware investments and daily expenses. Improving operational efficiency is essential for continued operation and profitability after the halving.
Methods to improve efficiency include purchasing more advanced devices, selling held Bitcoin on-chain, and conducting equity offerings. For example, Hut8, headquartered in Canada, is improving mining farm efficiency through customized software and aims to acquire more power plants. After the recent merger with USBTC, its hash rate almost doubled to 7.3 exahashes per second.
Marathon Digital, the listed miner with the highest actual hash rate, has launched a $750 million mixed equity offering. Core Scientific recently completed an oversubscribed $55 million equity financing round to improve debt repayment capacity. The company also focuses on keeping its hardware online and fully utilizing available devices.
However, CEO Adam Sullivan believes that the Bitcoin network has “self-healing characteristics” and will continue to incentivize miners. With more miners shutting down and hash rate decreasing, the difficulty of proof-of-work will also decrease. This can compensate for the growing speed and volatile node execution interest.
Mining difficulty is a moving average of the average number of blocks, and when block generation speed is too fast, the difficulty increases. Therefore, the network automatically adjusts, and departing miners release larger block shares to reward those who stay. For remaining participants, mining becomes more profitable.
The Bitcoin halving in 2024 will take place after the launch of Bitcoin Ordinals. This protocol, which supports Bitcoin NFTs, brings new use cases and drives increased transaction fees and developer activity. These effects provide additional reasons for optimism in terms of mining profitability and sustainability.
In November 2023, the Ordinals frenzy pushed Bitcoin transaction fees to the highest level in two years (over $37), surpassing Ethereum’s gas fees. Since then, the NFT fees have accounted for more than 20% of mining revenue.
As of February 22, 2024, Bitcoin is one of the top three blockchains in terms of NFT trading volume. In December 2023, it became the leader. Therefore, Ordinals activity is a novel way to incentivize miners and maintain network security through higher transaction fees.
High transaction fees have led to a surge in the stock prices of listed mining companies. At the end of 2023, these companies profited greatly as mining revenue was nearly four times the two-year average level.
Since then, fees have dropped to slightly above $4. However, mining stocks like Marathon Digital (MARA) and Cleanspark (CLSK) have outperformed Bitcoin in the past three months, rising by 116.57% and 231.28% respectively. They may also have a positive response to stable stock market performance.
Top Mining Locations
According to data from “World Population Review,” the United States leads with a 35.4% share of the cumulative hash rate in 2023, followed by Kazakhstan (18.1%), Russia (11.23%), Canada (9.55%), and Ireland (4.68%). China used to be the second-largest mining location, but it banned Bitcoin mining in 2021, leading miners to move to Kazakhstan.
Concerns about Environmental Limitations
Bitcoin mining still has a high level of unsustainability. In 2023, the energy consumed by Bitcoin mining was equivalent to the entire Australia or seven times Google’s annual energy consumption (91 terawatt-hours).
In the United States, Bitcoin mining accounts for between 0.6% and 2.3% of electricity demand, equivalent to the electricity consumption of an entire state like Utah. Earlier this year, the US Energy Information Administration requested all US miners to report their energy usage in detail. The agency’s report states:
“Concerns raised to the US Energy Information Administration include stress on the power grid during periods of high demand, potential increases in electricity prices, and impacts on energy-related carbon dioxide (CO2) emissions.”
Major news media such as The New York Times have raised concerns about the “public harm” caused by large mining facilities. The Biden administration has a critical stance on cryptocurrencies, and the US Energy Information Administration emphasizes that the price surge has stimulated more mining activities, leading to increased power consumption.
Meanwhile, New York has implemented a two-year ban on new mining operations unless they are fully reliant on renewable energy. In Texas, miners can receive rewards for reducing operations during periods of high energy demand, as part of the “demand response” program.
Finally, let’s take a look at two technical indicators that provide an overall view of Bitcoin and potential price trends.
MVRV Z-score
MVRV is an oscillator that compares Bitcoin’s market value to its realized value or its spot price to its realized price. This chart visualizes market cycles and profitability, helping to identify periods when coins are undervalued or overvalued.
As the market matures, Bitcoin’s peaks, volatility, and returns become less extreme. Against the backdrop of increasing adoption of this groundbreaking digital currency, the growth rate of its realized price has slowed compared to past cycles. Therefore, a progressive rise is more likely to occur than an explosive surge, with better long-term growth potential.
Meanwhile, a significant portion of Bitcoin has been accumulated by holders. Long-term holders’ supply reached its highest level at the end of 2023, and whales continue to demonstrate confidence in the asset this month.
The Power Law Corridor shifts the focus from the current price to whether Bitcoin is overbought or oversold. This charting tool establishes a corridor with two parallel lines representing the lower and upper limits of the price range.
Crossing above the midline indicates an overbought condition, while the opposite indicates an oversold condition. Breaking above the bottom line suggests the possibility of further growth, and Bitcoin typically reaches the midline level within 1-2 months.
According to James Bull, overbought conditions typically last for about 1.5 years (strong bull market), while massive bear market cycles last for 2.5 years. However, the model also has its critics. As its creator Harold Christopher Burger stated:
“Admitting that Bitcoin follows power laws is temporary. Additionally, there are other factors besides time that should affect Bitcoin’s price, such as its scarcity.” However, “in the log-log plot, the power-law fit is getting better and better, indicating that this model may be valid.”
Before and after each halving, the price of Bitcoin is driven by multiple factors beyond scarcity. The halving event in 2024 happens against the backdrop of large-scale Bitcoin ETF inflows, increased on-chain activity, strong momentum, and overall market maturity.
With improvements in the macroeconomic environment, including expected rate cuts by the US Federal Reserve, Bitcoin seems destined to stand out within the Power Law Corridor. It has already experienced the longest bear market, and large miners have prepared for the consequences of the halving reward.
Our Bitcoin Price Prediction for the 2024 Halving
EarnBIT’s analysis team believes that Bitcoin will rise to $55,000 to $60,000 before the halving, with a range of $32,000 to $85,000 for the year. Past performance does not indicate future results, and new black swan events are always possible, but so far, the overall environment seems favorable for growth.
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