Bitcoin has been on a wild ride since the start of 2023, surging by over 80% since January. Despite this, many experts believe that the current rally could be just the beginning and that Bitcoin has the potential to surpass its previous highs.
Over the past five months, Bitcoin has risen from a significant low of $16,000 as of late last year to trading as high as above $31,000 in the past 24 hours. While the asset might have shown quite an apparent recovery, research shows BTC could record more profits in 2024.
Why Bitcoin Could Record Massive Highs In 2024
Though Bitcoin has several notable factors influencing its rally. However, one of the crucial factors that could contribute to the asset’s massive growth in 2024 is the continuous fall of the United States Dollar dominance and the crisis in the traditional banking sector.
Many people will seek an alternative store of value, such as BTC, as the US dollar loses dominance and the crisis intensifies. This happened last month when major US banks such as Silvergate, Silicon Valley, and Signature Bank experienced closed by federal authorities in the country.
This impacted Bitcoin’s value massively in March as investors sought another option for savings, enabling BTC to push its price above $25,000 for the first time in several months. One more factor that could drive the Bitcoin rally higher in 2024 is the fact that there is a limited supply of the cryptocurrency.
Unlike traditional currencies, which central banks can print at will, the supply of Bitcoin is fixed at 21 million. As more people buy and hold Bitcoin, the available supply on exchanges decreases, which could lead to a surge in demand and higher prices.
The Bitcoin halving set to take place in 2024 is known to drive this phenomenon. The halving is a pre-programmed event every four years in the Bitcoin network, which reduces the reward received by miners for validating transactions in half. This means less BTC is created and sold on the market.
Can The Bitcoin Halving Impact Its Rally In 2024
The BTC halving is a highly anticipated event in the crypto community. Many hope this could be a good enough catalyst to drive the asset beyond its peak of $69,000 and push the crypto market upwards.
Historically, the Bitcoin halving has significantly impacted the price of Bitcoin. Massive rallies followed the three previous halving events in 2012 and 2016, and 2020 in the price of Bitcoin.
The basic economic principle of supply and demand comes into play here. With the reduced supply of new Bitcoin, and assuming demand for the cryptocurrency remains constant or increases, the price should rise due to this scarcity.
This is because as this event takes place in 2024, there will now be fewer Bitcoin available to be bought on the market, which makes each BTC more valuable.
According to Pantera Capital, the next Bitcoin halving will occur on April 20, 2024. And while, on average, the market peaks 1.3 years after the halving, should history repeat itself, the next BTC halving could result in a BTC spike to $149,000 after the event.
However, it’s important to note that the impact of the Bitcoin halving on the cryptocurrency’s price is not immediate. It can take several months or even years for the full effects to be felt in the market.
This is because the halving event is priced-in – it is pre-programmed and known in advance by everyone in the Bitcoin network. Therefore, some investors may anticipate the halving and have already priced it into the market well before it happens.
In addition, other factors can impact the price of Bitcoin, such as overall market sentiment, geopolitical events, and regulatory changes. These factors can often overshadow the impact of the halving in the short term.
Regardless of the news circulating in the industry, BTC and the rest of the crypto market have been bullish over the past weeks. However, over the past 24 hours, BTC is experiencing a slight retracement down by 0.6%, with a trading price of $30,266, at the time of writing.
Featured image from iStock, Chart from TradingView.