Bitcoin (BTC) like gold flourishes because of its decentralized, permissionless, limited, and censorship-resistant traits. But unlike the precious metal, the digital asset’s finite supply is known. As we approach another halving on its way to its cap of 21 million BTC, we are now feeling its increasing scarcity.
Each halving increases Bitcoin mining difficulty and reduces the rewards by half. So, it not only changes the way the coin’s ecosystem operates but it also serves as a reminder of its exclusivity. With that, each event has historically catalyzed massive bull runs.
All-New Bitcoin Prices Due to Supply and Demand Dynamics
According to eToro, it takes an average of 10 minutes to mine a block on the Bitcoin blockchain, which rewards the miner 6.25 BTC. Given these numbers, around 144 blocks are mined daily, which generates 900 new BTC.
Normally, miners don’t keep all their haul because they have to sell some of their BTC to cover their expenses. These sell-offs drive down BTC prices from time to time. However, the upcoming halving may change the way Bitcoin miners operate.
Due to mining rewards getting slashed in half, the overall Bitcoin mined per day will be reduced to 450 BTC by April 2024. The resulting scarcity leading to a surge in BTC prices could reduce the selling pressure exerted by miners. So, the next cycle could lead to unprecedented valuations for the digital asset.
The source didn’t put in any figures in its theory but super bullish predictions by expert analysts are betting $80,000, $140,000, and even $250,000 per BTC in 2024. We’d like to clarify though that these forecasts have factored in the anticipated landmark approval of the US Securities and Exchange Commission of all pending spot Bitcoin exchange traded funds (ETFs) under its jurisdiction.
No Major Price Movements for BTC
On the other hand, there’s a possibility that Bitcoin prices will not get far from what we are witnessing now. The proponents of this theory cite the “efficient market hypothesis” (EMH) as a basis, which argues that since the “halving is a public and predictable event,” there’s a chance that the price of the future halvings may already be reflected in prevailing prices.
Let’s not discount the historical data that has consistently displayed all-new highs in Bitcoin prices at each succeeding halving cycle. But then again, the EMH theory could still play out because of the fact that more people are now aware of the nature of cryptocurrencies and have a better grasp of their inner workings such as halvings.
The Caveat
The post warns that although there is tremendous optimism about the Bitcoin halving in relation to the digital asset’s price, investors should be on guard for potential shifts in market sentiments stemming from hype and the effects of the competition. We would like to add here the immense influence that regulations may pose to the crypto along the way.