The huge overall demand for Bitcoin, along with macroeconomic factors, will play a larger role in driving Bitcoin prices this year.
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Multiple industry analysts say Bitcoin’s $69,442 halving in April is just a fraction of the staggering gains the cryptocurrency could see this year.
Next month, the Bitcoin halving will reduce the daily production of BTC by about 450 BTC from the current average of 900 BTC per day, investment researcher Lyn Alden told Cointelegraph.
However, Alden said the amount of supply cuts pales in comparison to daily fiat inflows and outflows from cryptocurrency exchanges and Bitcoin exchange-traded funds (ETFs).
“In fact, inflows or outflows could easily exceed 10 times that value,” Alden said, adding that overall demand for Bitcoin is a “bigger factor than tightening supply.”
Alden stressed that demand for Bitcoin has historically been more correlated with measures of global liquidity, such as global broad money supply, pointing to a chart reflecting BTC price versus global money supply (M2) .
"So I think the halving is important, but it's just one of many factors that determine the occurrence and timing of a bull market. Various measures of global liquidity, HODL waves and other catalysts combine to play a much bigger role," Alden said, adding:
“I’m bullish on the next two years because of the halving, expectations of improved global liquidity, and the fact that so many tokens rotate into strong hands in a bear market, so a relatively small increase in demand can drive price significantly.”
Markus Thielen, CEO and chief analyst at 10x Research, said the current rally is "certainly comparable to the bull market of 2020 and 2021," which initially peaked in April 2021.
Referring to tools such as quantitative analysis, Thielen has been bullish on the price of Bitcoin since it broke above multi-year highs on March 13, 2024.
Based on historical price changes and Bitcoin's recent highs, 10x Research predicts Bitcoin will reach $77,000 in early April and $99,000 by May 2024.
“When Bitcoin hit a new high of $68,300, we saw a wave of intraday selling, but every attempt to push the price lower was met with relentless buying,” Thielen said in a March 14 email to Cointelegraph wrote.
The analyst noted that whenever Bitcoin saw a new price breakout in February 2013, February 2017, and November 2020, the price could rise by 189% after 180 days. Thielen noted that ultimately, Bitcoin will peak 9 to 11 months after its historical breakout.
Thielen predicts that between December and February 2025 — or within nine to 11 months after the March 13 breakout — Bitcoin could rise to an eye-popping $146,000.
“While corrections and retracements can happen at any time, traders can use the breakout level ($68,300) as their new line in the sand, and we could argue that above this level, Bitcoin is likely to gain momentum over the coming weeks and days. Significantly higher in the month," the analyst said, adding:
“While Bitcoin may climb to 146,000 this summer, we currently maintain a price target of 125,000 as we expect this bull market to continue into 2025.”
Simon Peters, a cryptocurrency analyst at eToro, highlighted that the current Bitcoin rally is the first time Bitcoin has experienced a parabolic rise and reached an all-time high before the block reward halving.
According to Peters, the main reason for this breakout is the launch of a physical Bitcoin exchange-traded fund (ETF) in the United States on January 11, 2024.
“Demand for Bitcoin is rapidly outpacing new supply, which is something we’ve never really experienced in previous cycles,” Peters stressed. He added that prior to the launch of the ETF, demand had previously been primarily driven by retail, while the ongoing cycle would be "more institutional."
According to Peters, Bitcoin miners are the only natural sellers as they have been actively selling BTC since August 2023.
“This suggests to me that miners have sold off on the current rally in preparation for the upcoming block reward halving,” the analyst said, adding that all the selling was due to high demand for spot ETFs. was a 'good bid,'" Peters said, adding:
"If we do see a slowdown in cash ETF inflows, it could be a sign that the market has peaked and is losing momentum, but it's important to note that while ETFs have been a major contributor to the rebound so far, they are not the primary contributor to the sector. Sole Player. Other entities such as MicroStrategy and Bitcoin Whales also continue to accumulate.
At the same time, Exness financial market strategist Li Xing believes that macroeconomic developments have driven Bitcoin prices this year.
The analyst said that in addition to the launch of spot Bitcoin ETFs, other economic developments, such as expectations of slower monetary policy and lower interest rates in the United States and elsewhere, may increase Bitcoin’s appeal as an alternative store of value.
"In addition, geopolitical risks and uncertainties surrounding the U.S. election are likely to continue to boost demand, marking the beginning of a sustained bull market in the future," Lee added.
Bitcoin halvings are programmed to occur every 210,000 blocks, or roughly every four years, and are designed to maintain Bitcoin's deficit and offset inflation.
Since its launch in 2009, Bitcoin has experienced three halving events in 2012, 2016 and 2020, slashing its miner incentives from an initial 50 BTC to the current 6.5 BTC. The upcoming Bitcoin halving in 2024 will further reduce mining rewards from 6.5 BTC to 3.125 BTC.
Historically, Bitcoin halvings have been associated with post-halving rallies. For example, after the 2016 halving, Bitcoin surged approximately 3,000% in 17 months, reaching the historical milestone of $20,000 in December 2017.
