Considering the historical performance patterns of Bitcoin halving and the current favorable environment, it is expected that the price of Bitcoin will reach $60,000 before the halving in 2024, fluctuating between $32,000 and $85,000 throughout the year. This article is sourced from EarnBIT’s article “Bitcoin halving 2024: Ultimate guide” and compiled, organized, and written by 白話區塊鏈.
Table of Contents:
1. The 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 2024: Finding Clues from Past Performances
Bitcoin Halving 2024 Prediction: Quickly Returning to $69,000?
Daily RSI
5. Bitcoin Halving 2024 and Spot ETF
6. Prediction for 2025: Price of Bitcoin after Halving to Reach $150,000-$200,000
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, which is an event that occurs every four years and reduces miner rewards. The evolution of the market structure supports the widely anticipated uptrend. This halving cycle is different from the previous ones, and our guide summarizes common price predictions and unique driving factors.
The halving reward will correspondingly reduce the number of newly mined Bitcoins. This happens 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 distributed when a network node generates a block, approximately every four years. First four years: 10,500,000 coins. Next four years: 5,250,000 coins. And so forth…” – Satoshi Nakamoto, “The Cryptography Mailing List,” January 8, 2009.
This event will decrease the profitability of miners who use specialized hardware (Application-Specific Integrated Circuits or ASICs) to process transactions. According to CoinDesk data, mining a block is currently profitable at a cost of at least $10,000 to $15,000. After the halving, costs may rise to $40,000 per coin.
The reward will be reduced from 50 Bitcoins per block to 6.25 Bitcoins, and further reduced to 3.125 Bitcoins on April 19, 2024. You can use a Bitcoin halving countdown clock to track the countdown.
Despite the importance of the scarcity narrative, factors beyond the contraction of supply are also at play. In theory, a decrease in inflation rate should boost demand, but the actual price impact may be limited.
The slower coin production rate reduces inflation rate while ensuring that the supply of Bitcoin remains limited (21 million coins). This non-inflationary feature attracts cryptocurrency enthusiasts as Bitcoin is not influenced by central authorities or natural reserves, unlike fiat currency 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 CO2).
Bitcoin is also influenced by factors beyond the speed of supply expansion. These factors include both internal and external factors in the blockchain industry: regulations, 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 have already been reflected in the price. However, as Warren Buffett said more than 30 years ago, “Investing in a market that everyone believes is efficient is like playing bridge with someone who has been told not to look at the cards.”
As noted by Grayscale, the only certainty is the change in supply structure. The 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 factors 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 was the year of the initial coin offering boom, with over $5.6 billion flowing into other cryptocurrencies. By December 2017, Bitcoin reached $20,000 from $650.
In 2020, during the COVID-19 pandemic, inflation concerns soared. By November 2021, Bitcoin surged from $8,600 to $68,000, reaching a historical high of $69,044.77 on November 10. Its recognition as a hedge asset played a significant role.
Past performance cannot guarantee future results, and as shown, influencing factors are not limited to cryptocurrencies. However, past halving events provide clues to potential scenarios.
Timing of Highs and Lows
In theory, Bitcoin rebounds from lows long before halving, typically 12-16 months before the event, according to CoinDesk data. Pantera’s analysts estimate that the bottom usually occurs around 477 days before the halving.
The uptrend continues both before and after halving. The average duration of the post-halving bull market is 480 days (until the subsequent peak).
This time, the bottom occurred before the expected date (December 30, 2022), happening on November 10 at $15,742.44.
If history repeats itself, according to Pantera’s communication, the market will top out by the end of 2025.
In the previous three halving cycles, Bitcoin saw a surge of over 30% in the first eight weeks. As Marcus Aurelius Tiren, founder of 10x Research, said, during that period, Bitcoin’s average increase was 32%.
Given the current price of $52,456.77, if the same trend repeats, the price will return to the all-time high of $69,000. Tiren added that this possibility increases as “we get closer to the Bitcoin halving.”
On February 19, 10xResearch reported that the daily RSI (Relative Strength Index) had broken through 80. This momentum indicator measures the speed and change of price movements. When the index reaches 70, it indicates strong upward momentum.
Historically, when the RSI exceeds 80, it suggests that the price will increase by over 50% in the next 60 days. Bitcoin’s 14-day RSI last reached such a high point in December 2023. As of February 22, it stands at 70.88%.
This year, Bitcoin’s uptrend has been supported by the adoption of spot Bitcoin ETFs. These trading platforms allow investors to gain investment exposure to Bitcoin without directly holding it, attracting over $5 billion in net fund inflows.
This influx of funds not only supports investor sentiment but also mitigates the 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 $43,000 price). After the 2024 halving, the total will decrease to $7 billion, requiring less buying pressure to offset selling pressure.
Spot Bitcoin ETFs have absorbed “almost three months’ worth of potential selling pressure post-halving” in just 15 trading days.
Due to the expectations of the market, there is usually an uptrend in Bitcoin before the 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 mid-2025.
Bitcoin’s order book liquidity has reached its highest level since October 2023, although lower than before the FTX crash. Unless demand decreases (contrary to the current situation), the reduction in new Bitcoin supply will undoubtedly boost its price. Some analysts suggest that a new all-time high has already begun.
Bernstein stated that the pre-halving behavior reflects the upcoming supply squeeze and the growing demand for spot ETFs. The company expects the price to “reach new all-time highs 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 the halving day in April, multiply it by 4, and that’s where you’re going to be in the next 18 months.”
Scaramucci used a conservative starting point of $35,000 (the price at the time of the halving) when calculating $170,000. With the current price of $52,000, this scenario would put Bitcoin over $200,000.
Meanwhile, according to his long-term estimation, the market capitalization of this groundbreaking cryptocurrency should reach half the market capitalization of gold. This would require the market cap to grow from the current approximately $1 trillion to around $6.5 trillion, more than a six-fold increase.
Skeptics: Need More Catalysts to Reach All-Time High
Rachel Lin, Co-founder and CEO of SynFutures, stated that the halving is “unlikely to trigger a full-scale bull market” unless there are additional catalysts.The adoption of Bitcoin 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 about cryptocurrencies in the future to dampen investor enthusiasm. This could pave the way for the next bull market trend.
Factors to be considered in the short and medium term
The halving is a positive factor in the medium term. Peter Henn from CCN summarized 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, unfavorable changes in regulatory policies and 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). Hacking 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.
The hash rate reached its all-time high in 2023. Source: Glassnode.
Large miners are actively accumulating Bitcoin. According to Taras Kulyk, the founder of SunnySide Digital, “the halving has been considered by most companies” because “they have been anticipating and factoring the halving price into their predictions 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 crucial 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, based in Canada, is improving mining efficiency through customized software and aims to acquire more power plants. After its recent merger with USBTC, its hash rate almost doubled to 7.3 exahashes per second (EH/s).
Marathon Digital, the publicly traded miner with the highest actual hash rate, launched a $750 million mixed equity offering. Core Scientific recently completed an oversubscribed $55 million equity financing round to restore its debt-paying ability. 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 properties” and will continue to incentivize miners. With more mining machines shutting down and the hash rate decreasing, the difficulty of proof-of-work will also decrease. This can compensate for the growing speed and volatile interest in node execution.
Bitcoin mining difficulty chart. Source: CoinWarz.
Mining difficulty is a moving average of the number of blocks, and when the block generation speed is too fast, the difficulty increases. Therefore, the network adjusts automatically, with leavers releasing larger shares of blocks to reward those who stay. For the participants who stay, mining becomes more profitable.
The halving in 2024 will take place after the launch of Bitcoin Ordinals. This protocol, which supports Bitcoin NFTs (collectibles), has brought new use cases and driven an increase in transaction fees and developer activities. These effects provide additional optimistic reasons for the profitability and sustainability of mining.
In November 2023, the NFT frenzy pushed Bitcoin transaction fees to the highest level in two years (over $37), surpassing Ethereum’s gas fees. Since then, the collectibles fees have accounted for over 20% of miners’ 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 activities are a novel way to incentivize miners and maintain network security through higher transaction fees.
Growth of Bitcoin collectibles fees. Source: Glassnode.
High transaction fees have led to a surge in the stock prices of publicly traded mining companies. At the end of 2023, these companies made huge profits as miners’ income 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 respond positively to a stable stock market performance.
Market value of the top ten Bitcoin mining stocks. Source: companiesmarketcap.com
Top mining locations
According to data from the World Population Review, measured by cumulative hash rate, the United States led with a share of 35.4% 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, causing miners to move to Kazakhstan.
Concerns about environmental limitations
Bitcoin mining still has a very 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 stated:
“Concerns raised to the US Energy Information Administration include stress on the electricity grid during peak 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 drawn attention to the “public harm” caused by large mining facilities. The Biden administration has a critical attitude towards cryptocurrencies, and the US Energy Information Administration emphasized that the surge in prices has incentivized more mining activities, leading to increased energy consumption.
Meanwhile, New York State has implemented a two-year ban on new mining facilities unless they rely entirely 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 compares its spot price to its realized price. This chart visualizes market cycles and profitability, helping to identify periods when coins are undervalued or overvalued.
Bitcoin’s MVRV Z-score chart. Source: lookintobitcoin.com
As the market matures, Bitcoin’s peaks, volatility, and returns become less extreme. In the background of this increasingly adopted groundbreaking digital currency, the growth rate of its realized price has slowed compared to past cycles. Therefore, a gradual rise is more likely to occur than an explosive surge and has better long-term growth potential.
Meanwhile, a large portion of Bitcoin has been accumulated by holders. The supply of long-term holders reached its all-time high at the end of 2023, and whales have shown 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 chart tool establishes a corridor with two parallel lines, including the lower and upper bounds of the price range.
Breaking above the bottom line indicates the possibility of further growth and usually Bitcoin reaches the midline level within 1-2 months.
Bitcoin’s price projection based on the Power Law Corridor for the halving in 2024: February 17, 2025. Source: bitcoin.craighammell.com
According to James Bull, overbought conditions typically last for about 1.5 years (a 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 said:
“Recognizing that Bitcoin follows a power law is temporary. Moreover, there are other factors besides time that should affect Bitcoin’s price, such as its scarcity,” but “in the log-log plot, the fit of the power law becomes better and better, which suggests 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 occurs against the backdrop of large-scale Bitcoin ETF inflows, increased on-chain activities, strong momentum, and overall market maturity.
With improvements in the macroeconomic environment, including expected rate cuts by the US Federal Reserve, Bitcoin appears poised to stand out in 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 price prediction for Bitcoin’s halving in 2024
The analysis team at EarnBIT 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 guarantee future results, and new black swan events are always possible, but so far, the overall environment seems favorable for growth.
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