The largest digital asset has climbed 70% since December 31, 2022, in a partial recovery from a historic rout in 2022. While the token is currently trading around $30,000, halving has the potential to trigger a gain of at least 78%, according to Bloomberg Intelligence and Matrixport.
Here is a summary of the key points:
- Bitcoin has rebounded by 70% since December 31, 2022.
- The next Bitcoin halving is due in April 2024.
- Halvings have historically led to price increases for Bitcoin.
- Analysts predict that Bitcoin could reach $50,000 or more by April 2024.
- However, there are some risks to this outlook, such as increased regulation and competition from other digital assets.
A halving, or halvening, cuts in half the number of tokens that Bitcoin miners receive as a reward for their work. The quadrennial event is scheduled for April 2024 and is part of the process of capping Bitcoin supply at 21 million tokens. The coin hit new highs after each of the previous three halvings.
The upcoming halving is currently 50% priced in based on previous cycles, according to Jamie Douglas Coutts, a Bloomberg Intelligence analyst. Coutts predicts that Bitcoin could reach $50,000 by April 2024.
"Bitcoin cycles bottom around 12-18 months before the halving, and this cycle structure looks similar to the previous ones, albeit many things have changed—while the network is vastly stronger, Bitcoin has never endured a prolonged severe economic contraction," he said.
The Bitcoin rebound has sputtered of late, restrained by cooling expectations of Federal Reserve interest rate cuts amid persistent inflation. A U.S. regulatory crackdown on crypto in the wake of the collapse of the FTX exchange in November 2022 also threatens to darken the market outlook.
"If the collapse of FTX was indeed the bottom of this cycle, then history would suggest that we still have approximately 350 days of 'accumulation' before witnessing the characteristic post-halving breakout price action," said Jacob Joseph, an analyst at CCData.
Markus Thielen, research head at Matrixport, said in a recent note that Bitcoin will reach around $65,623 by April 2024—more than double the current price.
Bitcoin is still about $41,000 below its all-time high of almost $69,000 in November 2021—which came 18 months after its 2020 halving. Crypto markets crashed last year as central banks raised rates to curb price pressures and digital asset companies imploded.
"Bitcoin may once again reach a new all-time high in the future, however, it is unlikely to see the same growth as previous cycles due to increased market size and competition from other digital assets," said CCData's Joseph.
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