Exceeding expectations is nothing new for Bitcoin.
Over the last 15 years, Bitcoin (BTC -2.09%) has already surpassed nearly every projection, estimate, and expectation. In just over a decade, the cryptocurrency has grown from just a few pennies per digital coin to more than $50,000 by 2021, taking the world by storm.
With its price sitting at roughly $70,000 in June 2024, the next major landmark in sight is the coveted six-figure mark. As sensational as it might sound, history tells us that a $100,000 price tag is increasingly likely. But the real question is: When will Bitcoin make it past $100,000? Could it be in 2024?
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Measuring the effect of the halving
Any prediction like this is inherently speculative. But a bit of speculation can be healthy and force us to evaluate an investment’s long-term developments.
To forecast Bitcoin’s performance, it’s imperative to consider the trends around the halving. The halving is a pre-programmed event that occurs approximately every four years. It reduces the reward for mining new blocks by half and forms the foundation of Bitcoin’s robust monetary policy.
This mechanism effectively decreases the rate at which new bitcoins are created over time, contributing to Bitcoin’s scarcity and, historically, its price appreciation. Bitcoin recently underwent its fourth halving in April 2024, sending its inflation rate to just 0.85%.
Due to the clear influence the halving has on dynamics around Bitcoin’s supply and demand, we can form our projection around it by looking back at previous halvings. In the year Bitcoin undergoes a halving, its price increases by around 125% on average. If we measure from its price at the beginning of the year ($44,000), a 125% increase would put its price at $99,000.
A new variable to account for
If this halving has a similar effect to past ones, it appears that Bitcoin should be within striking distance of the $100,000 mark in 2024. But to add more certainty to 2024 being the year Bitcoin hits six figures there is one other variable we need to consider.
Unlike past halving cycles, this one has a new factor that could prove to be the extra push the cryptocurrency needs to surpass $100,000: Spot Bitcoin ETFs. For most of Bitcoin’s history, its rise was primarily driven by retail investors like you and me. But with spot Bitcoin ETFs, deep-pocketed institutional investors can start accumulating Bitcoin without regulatory or custodial concerns.
The arrival of institutions, along with expanding access to retail investors who may have previously been uncomfortable buying Bitcoin off a crypto exchange, should place additional pressure on Bitcoin’s supply. In fact, we are already seeing the net effect of this new Bitcoin exposure vehicle.
In February, the ETFs were buying 10 times the daily production rate of Bitcoin (roughly 900 bitcoins per day), helping to push its price to a new all-time high. While the rate of buying has since cooled, it is likely safe to say that we are only seeing the tip of the iceberg. Of more importance, though, if buying were to return to these levels, the ETFs would be outdoing Bitcoin’s daily supply at 20 times the rate due to the halving now passed.
The bottom line
2024 is shaping up to be the year that Bitcoin reaches $100,000. With its price sitting near $70,500 today, that presents a noteworthy opportunity with a nice 40% gain.
However, we must keep in mind that it is usually the year after the halving that Bitcoin makes its most impressive gains. During those years, after the full effect of the halving materializes, Bitcoin has soared by more than 400% on average. If for some reason Bitcoin doesn’t hit $100,000 this year, 2025 would be the next safe bet.
Whether it happens this year or next, one thing is clear: ongoing halvings, growing adoption, and institutional involvement make a strong case for Bitcoin to keep surprising us for years to come.