Probable Bitcoin Price Forecast for 2024
By Anti Danilevski, the founder and CEO of Kick Ecosystem
Introduction
Cryptocurrency forecasting is an uncertain and risky business. The analysis presented here reflects only my personal opinion and should not be perceived as absolute truth. Unexpected factors such as wars, economic crises, and “black swan” events can drastically change the market situation. In principle, I myself do not like expert forecasters and rarely write such predictions. This time, I decided to share my thoughts only because there are extremely significant events expected in 2024 that significantly increase the likelihood of this forecast coming true.
Key Growth Factors
Bitcoin halving, slowing inflation in the United States, and potential approval of Bitcoin spot ETF are key factors that may contribute to the increase in the value of Bitcoin. I will now elaborate on why this is important, how it has affected the prices of different assets in the past, and how it may impact the future.
Bitcoin Halving 2024
Bitcoin halving is an event in the Bitcoin network that occurs approximately every four years (or every 210,000 blocks). During halving, the reward for mining one block is halved. In other words, it is a mechanism embedded in the Bitcoin protocol that limits the number of new bitcoins entering circulation.
Since the inception of Bitcoin, the block reward initially was 50 bitcoins. After the first halving, it decreased to 25 bitcoins, then to 12.5 bitcoins, and after the last halving in 2020, the reward is 6.25 bitcoins. The next halving will reduce the reward to 3.125 bitcoins per block.
The goal of halving is to create a scarcity effect, as the total number of bitcoins that can be created is limited to 21 million coins. With the decrease in the rate of new bitcoin issuance, it is expected to stimulate the rise in the price of bitcoin due to a reduction in supply with constant or growing demand.
The next (more precisely, the nearest) halving will occur in April 2024. Historically, all previous halvings have had a significant impact on the price of Bitcoin. For the sake of experiment, I will take periods 5 months before and 5 months after each halving:
- Five months before the 2012 halving, which occurred on November 28, Bitcoin was priced at approximately $12.5. Five months after this event, in April 2013, the price of Bitcoin reached $139. In percentage terms, this is a 1012% increase.
- Before the 2016 halving, which occurred on July 9, the price of Bitcoin was around $673 at the end of June. Five months after the halving, by the end of November 2016, the price had risen to $745. In percentage terms, this is a 10.7% increase.
- Five months before the 2020 halving, which occurred on May 11, Bitcoin was priced at about $8,750. Five months after the halving, on October 25, 2020, the price of Bitcoin had increased to $13,000. In percentage terms, this is a 48.6% increase.
Seemingly a relatively small increase. However, looking further, the trend of price growth persisted:
- After the first halving, the price of Bitcoin rose to nearly $1000 within a year (from $139).
- After the second halving, the price of Bitcoin gradually increased to $20,000 by the end of 2017 (from $745).
- The last halving in 2020 occurred at a price of around $13,000, followed by an increase to $3,000, and in 2021, to a record $69,000.
Thus, historically, the price has risen both months before the halving as well as after each halving.
If we consider only this factor, with a base of the current price at $36,000, the price of Bitcoin after the halving should be between $128,000 and $165,000. If you are good with math, you can verify these figures yourself. Personally, I would bet on $128,000 if not for other factors that will impact this event.
Slowing US Inflation and Federal Reserve Policy Easing
Reduced inflation and a soft monetary policy by the Federal Reserve traditionally stimulate investments in high-risk assets, including cryptocurrencies. Historical data confirms that such economic cycles are accompanied by increased interest in Bitcoin.
The key rate in the US has decreased (rounded, for a general overview):
- In 1990, from 7% to 3% — gold slightly increased, from $834 to $868, a growth of 4.08%.
- In 2001, from 5.5% to 1.25% — gold slightly increased from $452 to $488, a growth of 7.96%.
- In 2007, from 6.25% to 0.5% — gold increased from $959 to $1176, a growth of 22.63%.
- In 2018 and 2019, the Federal Reserve’s interest rate policy was a major factor influencing the gold market, with prices reaching new highs in 2020 during the COVID-19 pandemic, rising from $1,886 to $2,063 per ounce, a growth of 9.38%.
Here, an important point to consider is that historically, Bitcoin has shown a multiple percentage increase compared to gold. Roughly speaking, if gold rises or falls by 3%, Bitcoin can rise or fall by 30%.
Why do I draw an analogy with gold? Because there is practically no historical data on the impact of a key rate decrease on cryptocurrencies, but there is an impact on the price of gold. Bitcoin has already been recognized as a store of value and a world reserve currency (whether you like it or not, it has already happened). Therefore, anticipating a freeze in the key rate in the US and its subsequent decrease, referring to the dynamics of gold seems like a sensible idea.
Approval of Bitcoin Spot ETF
Approval of a Bitcoin spot ETF may foreshadow growth. We are witnessing this now, on the eve of the potential approval of several Bitcoin spot ETFs, the price has already risen from $27,000 to $36,000.
The launch of Bitcoin futures in 2017 began with cryptocurrency prices ranging from $930 to $978 at the beginning of the year. Within the year, the price sharply rose, reaching a historic high of $19,783 on the CoinDesk Bitcoin Price Index on December 17, 2017. This increase represents a more than 2400% increase from the initial price to the peak, demonstrating a significant impact of the launch of futures markets on the value of Bitcoin.
The markets indeed grew by 2,448% — right up to the day of the futures launch. This turned out to be the peak. On the same day, a bear market began with a drop of -84%. Unlike halving, where prices continue to rise, after events like the approval of futures, historically, the price often falls, making this factor important to consider in the short term.
However, in the spring of 2024, we will likely witness a unique scenario: the simultaneous launch of a series of Bitcoin spot ETFs plus the halving. Thus, in case this indeed happens in the spring of 2024, the “halving effect” may significantly offset the expected decline that “should” occur after ETF approval.
Geopolitics
Various analysts suggest different scenarios for the impact of the conclusion of the war in Ukraine on the price of Bitcoin — from completion in spring-summer 2024 to a protracted conflict lasting decades. What do historical data show?
Firstly, during the conflict, there was a strengthening of Bitcoin’s role as an alternative to fiat currencies and stocks, which may intensify with the ongoing war. According to analysis, the state of the crypto market in 2022–2023 was associated with several factors, including the war, as well as high inflation and slowing growth in developed economies. Some opinion leaders and economists believe that political instability will highlight Bitcoin as a transparent, open network, which may contribute to its growth, especially if banks close and local currencies depreciate.
If the war intensifies, it could trigger a recession in the EU and the US, theoretically increasing the value of Bitcoin, which could become the global digital standard. In previous articles, I wrote about factors that would make Bitcoin the world’s key reserve currency due to US actions. A considerable amount of time has passed since then, and we see that cryptocurrencies have firmly established themselves in our lives, whether the Central Bank of Russia likes it or not. According to insider information I have, 30% of Russia’s foreign economic activity is currently conducted using cryptocurrencies, which has finally and effectively stimulated our beloved Central Bank to legalize them.
Globally, the duration of the conflict in Ukraine, the beginning of the confrontation between Israel (more precisely, the US, this time through Israel) and the Arab world could also lead to Bitcoin transitioning from a high-risk asset to a low-risk one, undoubtedly contributing to its increase in value. I don’t know what will happen in the East and in Ukraine in 2024, so I don’t factor it into the Bitcoin price for 2024, but I consider it as a long-term perspective.
Summary
Historical data allows us to assume that the halving in 2024, changes in monetary policy, plus approval of Bitcoin spot ETFs, plus the easing of US monetary policy and the freezing of the key rate, followed by its decrease, will significantly contribute to the increase in the value of Bitcoin in 2024 and 2025. The launch of spot ETFs may negatively impact the price, but this will be mitigated by the halving effect. In the long term, ETFs will open the market for multi-billion-dollar institutional investor capital, leading to a market deficit and, consequently, prolonged gradual growth, similar to the rise in the price of gold.
In a nutshell: $128,000 in the spring-summer of 2024, $165,000 by the end of 2024/beginning of 2025. Whether it hits the mark or not, we’ll see.
By Anti Danilevski, the founder and CEO of Kick Ecosystem
