Bitcoin (BTC), having experienced a remarkable 150% surge in 2023, seems to have shrugged off the effects of the longest crypto winter on record. Despite the success of the previous year, 2024 holds even greater promise, primarily due to evolving supply and demand dynamics and historical trends.
While history doesn’t always repeat itself, there are compelling reasons to believe that if patterns from previous years emerge in 2024, Bitcoin could potentially reach the coveted $100,000 mark, marking a gain of over 120%.
Here’s why achieving a six-figure Bitcoin this year is a plausible scenario.
A Halving Impact
Bitcoin’s renowned feature is its finite supply, capped at 21 million coins. The scarcity of Bitcoin over time is preserved through a mechanism hardcoded into its code known as halving. Every 210,000 blocks, approximately every four years, Bitcoin’s supply growth rate is halved. Currently, the annual growth rate stands at around 1.75%, but it will decrease to a mere 0.875% in April 2024 during the upcoming halving.
With 19.6 million coins currently in circulation, halvings ensure that the remaining 1.4 million will enter the market at a diminishing rate until around 2040, the projected year for the last Bitcoin to be mined. Halvings not only form the core of Bitcoin’s robust monetary policy but also influence short-term price dynamics by creating a situation where demand competes for a more restricted supply.
Historically, during halving years, Bitcoin’s price has seen an average increase of 128%. Although past performance doesn’t guarantee future results, if a similar trend unfolds in 2024, Bitcoin might approach a price of around $96,000, inching close to the six-figure mark.
Unprecedented Territory
The halving scheduled for April 2024 holds special significance. For the first time in history, there will be fewer Bitcoins available on the market than at the previous halving. Unlike past halvings that increased the available supply, data indicates a decrease in available Bitcoins since the May 2020 halving. Factors contributing to this include stubborn Bitcoin holders who resisted selling during the crypto winter, accumulating coins at perceived discounts.
Long-term holders, holding about 75% of Bitcoin’s total circulating supply, played a crucial role. As a result, with a reduced supply growth and a lack of available coins, Bitcoin’s price could experience a substantial surge. While the exact degree remains uncertain, the combined impact of supply crunch and the upcoming halving suggests that Bitcoin could surpass the $100,000 milestone. Exciting times lie ahead for the crypto market.
