- Bitcoin’s halving event in April is expected to drive future growth into the asset.
- Analysts predict a target price of $150,000 to $200,000 by midway through next year.
In what’s being heralded as the Year of the Dragon, Bitcoin is breathing its own fiery trail, helped in part by the much-anticipated “halving” event slated for April.
The crypto community is abuzz with one burning question: Has the market already adjusted its lenses to factor in the halving’s impact?
Bitcoin’s so-called halving happens once every four years and marks a change in the rewards, or payments, miners receive for creating new blocks on the network. It effectively halves the new supply of Bitcoin entering the market each day.
The next halving will likely be in mid-April and will see miners rewards drop — to 3.125 Bitcoin from 6.25 Bitcoin.
Fewer Bitcoin in circulation means, in theory, that the value of the asset will rise with demand amid more scarcity in supply.
Research institutions, seasoned experts, and analysts appear divided, however.
Some say that the run-up to fresh all-time highs has already begun, while others see the halving as a major catalyst for growth this year and beyond.
Bernstein analysts
Traditionally, Bitcoin’s value has surged following its halving events.
Yet, this time, the price dynamics pre-halving are being influenced by a unique blend of heightened demand from exchange-traded funds and the expected supply squeeze resulting from the halving, research firm Bernstein said in a note to clients.
“We expect Bitcoin to touch a cycle high of $150,000 by mid-2025 and touch all-time highs in 2024,” Bernstein analysts wrote.
Bitcoin reached a record high of almost $69,000 in November 2021.
The launch of spot Bitcoin exchange-traded funds in the US this year has been the most successful in ETF history, DL News reported Tuesday.
Skybridge Capital founder Anthony Scaramucci
Skybridge Capital founder Anthony Scaramucci said early this year that a post-halving trigger will push Bitcoin’s price into the six-figure range of $170,000 or higher in the next year and a half.
He first made the prediction to Reuters in January ahead of the World Economic Forum’s annual meeting in Davos.
“Wherever the price is on the day of the halving in April, multiply it by four, and it’ll reach that price in the next 18 months,” Scaramucci told the news outlet.
In an interview with Scott Melker on “The Wolf of All Streets” podcast weeks later, Scaramucci explained further: “I’m using a $35,000 number at the halving,” he said. “That’s conservative.”
Bitcoin breached the $50,000 mark this week.
If that price held during the halving in April, Scaramucci’s calculation would put Bitcoin at $200,000 by July 2025.
“My long-term price target is that Bitcoin easily gets to half the market capitalisation of gold,” he told Melker.
Depending on varied estimates of the total value of gold mined, Scaramucci’s Bitcoin target would mean the total value of the cryptocurrency in circulation could reach about $6.5 trillion. That’s a big prediction.
Today, Bitcoin hovers at about $1 trillion in total circulation.
Grayscale’s Michael Zhao
“It’s important to understand that a Bitcoin price increase post-halving is not guaranteed,” warned Michael Zhao, research analyst for Bitcoin ETF provider Grayscale, last week.
The anticipation of Bitcoin halvings suggests that savvy investors might buy early, potentially inflating prices before the event.
This challenges some models that link scarcity to price increases, but fails to account for the predictability of such scarcity.
Observations from other cryptocurrencies with halving events, like Litecoin, show that price increases post-halving aren’t guaranteed.
It indicates that factors beyond scarcity, including macroeconomic events, significantly influence Bitcoin’s value, Zhao said.
For example, the European debt crisis in 2012, the initial coin offering boom in 2016, and the economic stimulus during the 2020 Covid-19 pandemic all coincided with Bitcoin price surges, highlighting its appeal as an alternative investment during economic uncertainty.
These periods suggest that while halvings play a role in Bitcoin’s scarcity narrative, broader economic conditions and investor sentiment also drive its price dynamics, Zhao said.
SynFutures Rachel Lin
Rachel Lin, co-founder and CEO of SynFutures, a decentralised derivatives trading platform, said that while the halving will support markets, “it’s unlikely to drive a full-fledged bull run.”
“This anti-inflationary measure makes mining new BTC more difficult, restricting supply,” she said in an editorial published in Fortune on January 26.
“In the absence of significant crypto adoption, this alone isn’t enough to take us back to BTC’s peak of nearly $69,000, let alone surpass it,” Lin said.
A previous version of this article under the Scaramucci heading included the total value locked of Bitcoin, which is $1 billion. It was removed to instead refer to the total circulation of Bitcoin, which is about $1 trillion.
Sebastian Sinclair is a markets correspondent for DL News. Have a tip? Contact Seb at sebastian@dlnews.com.