From its earliest days, Bitcoin has been demonstrating price patterns that repeat over and over again throughout its history.
It appears they are centered around the halving an event happening in the Bitcoin network every four years.
As another halving approaches in 2024, a few other factors may affect the BTC price this year. Let’s break them down.
What is Bitcoin halving nd why is it historically followed by a price surge
To explain halving, let’s review how the first cryptocurrency works.
Every 10 minutes, new transactions made in the Bitcoin network are organized into blocks.
Miners verify block data and add it to the present blockchain transaction database.
For doing this, they get rewarded currently, one block reward stands at 6.25 BTC.
Halving cuts miner rewards in two. The next halving is expected in April 2024. Once it happens, miners will start getting 3.125 BTC per block.
Historically, mining sparked a BTC price surge within the following year.
After the 2012 halving, Bitcoin’s price skyrocketed from $12 to over $1,000 in late 2013. In 2016-2017, it increased from $650 to nearly $20,000.
Following the 2020 halving, Bitcoin’s price rose from $8,500 to its all-time high of $69,000 in 2021.
Most analysts expect a bull run after the 2024 halving, too. Given the dominance of Bitcoin, post-halving growth phases historically inspire an uptrend in the entire crypto market.
The first cryptocurrency itself is becoming a mature asset and makes fewer Xs from halving to halving but those who manage their funds properly may still make a decent profit.
Halving and the Bitcoin scarcity
Bitcoin was designed to be inflation-resistant in opposition to government-issued money, its supply is limited to 21 million coins in its code.
New Bitcoins enter circulation through miner rewards, and gradually cutting them is the way to decrease emission speed and ensure the scarcity of Bitcoin.
While its supply is limited, the first cryptocurrency boasts an ever-increasing demand from investors.
Proven track record and fundamental characteristics like decentralization and censorship resistance, as well as the ability to serve as a hedge against inflation, increase the number of Bitcoin investors year by year.
Together, these factors ensure a long-term price growth for Bitcoin nd every four years, it is supported by the halving.
We’ve already witnessed some pre-halving price surge recently Bitcoin grew by 150% in 2023.
Analysts expect market correction after halving and then a consolidation phase followed by a new bull market.
Why is everyone talking about Bitcoin ETFs
Bitcoin ETF approval might be another factor contributing to the BTC price growth this year.
A Bitcoin exchange-traded fund is the way to trade the first cryptocurrency on traditional exchanges like Nasdaq and NYSE.
This financial tool tracks the price of Bitcoin and lets investors gain exposure to BTC without the need to own or store it.
The ETF provides a regulated and familiar investment instrument for traditional investors who may find crypto wallets and exchanges uneasy to use.
On January 11, 2024, the SEC approved all 11 applications for a spot Bitcoin ETF, including major ones from Grayscale, BlackRock and Fidelity. On the fourth day of trading, the ETFs hit $11 billion in trading volume.
The historic decision by the SEC has made Bitcoin more accessible to millions of investors.
This fundamental factor has already led to a huge capital influx to Bitcoin, which is expected to result in a consequent price growth.
Fundamental factors driving Bitcoin price growth
Aside from ETFs, Bitcoin and other cryptocurrencies are increasingly adopted by institutional and retail investors.
In 2023 alone, the number of crypto users globally increased by 35% and hit 580 million compared to 430 million a year ago, according to data by Crypto.com.
In addition to the interest from institutional investors and the ETF approval, the firm mentions Ordinals as another catalyst behind Bitcoin’s adoption growth.
This protocol opens up the possibility to host images and other types of data directly on the Bitcoin blockchain, introducing the so-called, ‘Bitcoin-based NFTs.’
In 2023, Bitcoin outperformed traditional assets its annual returns surpassed those of stocks and gold and showed no more correlation with the stock market than before.
This is the reason why a growing number of investors consider Bitcoin a store of value and a long-term investment.
Long-term versus short-term predictions
Bitcoin price has continued to increase over the years due to fundamental factors such as hardcoded scarcity and increasing demand.
The upcoming halving is likely to facilitate a new growth phase in 2024–2025.
However, it is easier to predict the general trend rather than local price movements the actual price dynamic in recent months will depend on market conditions.
That’s why the recent Bitcoin price surge to $63,700 came as a surprise to many.
Therefore, it’s absolutely important to stay vigilant during these highly volatile market conditions. Make informed investment decisions, and may your Bitcoin holdings increase.
Yaniv Baruch is the chief operating officer at Playnance, a B2B Web 3.0 platform offering a plug-and-play, white-label P2P trading game that enables easy monetization for traffic owners, influencers and entrepreneurs. He is a veteran fintech professional, starting in 2004 at RBC, and has valuable expertise in the Web 3.0 space and a broad skill set in financial markets.
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