Yet when taking a long-term view, BTC has appreciated enormously overall when factoring in key coded supply shocks paired with expanding real-world usage.
As 2023 unfolds after a painful crypto winter, optimism is rekindling for Bitcoin thanks to two fast approaching catalysts:
- The mid-April 2024 Bitcoin halving event
- The recent approvals and launches of BTC spot ETFs (exchange-traded funds)
Past halving cycles have set off parabolic bull runs for Bitcoin, while easier mainstream access through investment funds could drive up demand. Here’s a deep dive into these developments and what they may mean for future BTC price projections:
What Is the Bitcoin Halving?
The Bitcoin halving refers to periodic supply constrictions programmed into its blockchain-based network. Specifically, the amount of newly minted Bitcoin paid to miners as rewards for upholding the system is slashed in half roughly every 4 years.
This gradual reduction of block subsidies over time is key to Bitcoin’s fixed 21 million total supply cap. The controlled issuance rate also makes BTC provably scarce and resistant to inflation - similar to precious metals like gold.
“Halving the mining rewards drives up scarcity while also slowing the minting of new coins as demand keeps growing globally...It can catalyze the next hype cycle and bull run. I think it is more likely that the Bitcoin price pulls back in the month after ETF approval though before climbing upwards through 2024. Too many folks expect instant rockets to the moon and get disappointed.”Basil Ismael, Crypto Trader & Analyst
This highlights the need to temper short-term ambitions, while still recognizing the long term shifts in investor accessibility that ETFs can unlock.
Here is the history of payout drops from the first blocks through upcoming halvings:
| Halving Number | Date | Mining Reward | BTC per Block |
|---|---|---|---|
| 1 | Nov-2012 | 50 BTC cut to 25 BTC | 25 BTC |
| 2 | Jul-2016 | 25 BTC cut to 12.5 BTC | 12.5 BTC |
| 3 | May-2020 | 12.5 BTC cut to 6.25 BTC | 6.25 BTC |
| 4 | Apr-2024 | 6.25 BTC cut to 3.125 BTC | 3.125 BTC |
The highlighted upcoming halving in 2024 will see the current 6.25 BTC block reward drop to 3.125 coins - reducing the minting rate of new supply entering circulation.
Breaking Down Bitcoin Halving Cycles and Outcomes
Blockchain researcher PlanB is well known for the Bitcoin Stock-to-Flow model, which factors in halving cycles to make pricing projections. The overall phases leading up to and through each halving can be summarized as:
- Rally and Peak Pre-Halving
- Correction Around Halving
- Consolidation Post-Halving
- New All Time High 18 Months Later
- Major Multi-Year Bear Market
“If we stay true to what’s happened at previous halvings, the model predicts fresh all-time highs within 18 months followed by a bigger market top in 2025 or 2026. It's simple. Buy Bitcoin when cheap 6 months before the halving, enjoy the pump, then sell for maximum gains about 18 months after the halving.”PlanB @100TrillionUSD, Creator of Stock-to-Flow Model
Growing Accessibility Through Bitcoin Spot ETF Approvals
While the halving focuses on supply mechanics, demand side catalysts have also lined up heading into 2024. This includes the groundbreaking rise of spot Bitcoin exchange-traded funds (ETFs).
After over a decade of institutional resistance, spot Bitcoin ETFs started launching in Canada and Europe towards the tail end of 2021, followed by U.S. approvals in October 2022. Rather than direct BTC ownership, these funds provide exposure to Bitcoin's price by tracking its performance.
The benefit for the overall crypto market is enabling broader participation for investors less comfortable with coin custody and security. Just like the launch of the first gold-backed ETF in 2004 brought an influx of capital to the precious metal, the same outcome is projected for Bitcoin with rising mainstream trust.
"When we look at assets like gold and how the advent of ETFs thrust it back into a bull market, it's possible we see something similar with crypto assets that have been stuck in a bear market for the past year.”Tim Harrison, Head of Capital Markets Insights at Galaxy Digital
Factoring In Halving Timelines with Growing Demand
With the upcoming April 2024 halving narrowing BTC’s flow by 50% while also sitting alongside easier public access, a perfect storm seems to be brewing. Can these dual catalysts propel Bitcoin to a value exceeding its former all-time high?
“By combining historical ROI patterns through halving events with steadily growing adoption, I forecast BTC likely reaching $150k - $250k by late 2025.”Benjamin Cowen, Into the Cryptoverse
Many crypto analysts have gone as far as predicting $100k+ prices in the 1-2 years after the halving. Others see less dramatic but still optimistic 6-figure outcomes:
Ultimately there are no guarantees when it comes to estimating future Bitcoin value. But the coded supply caps along with fresh accessibility gateways have aligned development cycles with investor hype cycles.
If upcoming halving timetables hold along with expanding real-world utility, a re-energized Bull Run 2.0 led by Bitcoin may be on the horizon.
This article is an opinion piece and not financial advice. Past performance does not guarantee future returns. As always, do your own research!