Bitcoin prediction: how the halving will effect the price in the short and long term
In this article Luca Discacciati explores the anticipated short-term and long-term effects of the upcoming Bitcoin halving on its price. Thanks to seasonality a forecast is made for bitcoin prices.
- Short Term (Before Halving): Price may rise slightly (10%) from current levels;
- Short Term (After Halving): Significant price drop expected (around 35%). This could be due to miners leaving the network due to lower profitability;
- Long Term: Bullish outlook. Increased demand from ETFs and potential investment from a small percentage of global assets under management could significantly increase the price;
- The halving will reduce the number of new Bitcoins created, potentially impacting supply and demand;
- Seasonality may play a role in price movements, with a potential peak before the halving followed by a dip.
Bitcoin Halving 2024: Navigating the Potential Price Swings
The Bitcoin blockchain is on the cusp of a significant event: the halving. Estimated to occur around April 25th, 2024, this pre-programmed feature cuts the block reward for miners in half. This reduction in new Bitcoin entering circulation has historically impacted price movements, and investors are closely watching how the 2024 halving will unfold.
Understanding the Halving's Impact on Supply and Demand
Bitcoin's finite supply of 21 million coins is a cornerstone of its design. The halving, occurring roughly every four years, regulates the pace at which new Bitcoins are introduced. By reducing the block reward, the halving creates scarcity, a fundamental principle in economics. When the supply of a desired asset shrinks, its value can potentially rise due to increased demand.
Short-Term Price Volatility: A Miner's Squeeze
The immediate effects of the halving might be felt by miners. With halved rewards, their profit margins could shrink significantly, especially if the Bitcoin price remains stagnant. This economic pressure could force some miners to shut down operations, potentially leading to a temporary decrease in the network's hash rate, the measure of its computational power. A lower hash rate could theoretically make Bitcoin more susceptible to manipulation, impacting price stability. Additionally, historical price movements (Bitcoin seasonality) suggest a potential short-term price dip around the halving period, followed by a correction.
Long-Term Optimism: Scarcity Meets Accessibility
Despite the short-term uncertainties, the long-term outlook for Bitcoin appears promising. The halving's impact on scarcity, coupled with other factors, could propel Bitcoin's value:
- Increased Demand: As the supply of new Bitcoin dwindles, existing coins become more attractive to investors seeking a scarce asset class. This potential rise in demand could drive up the price in the long run.
- ETF Adoption: The recent approval of Bitcoin ETFs has opened doors for mainstream investors to enter the cryptocurrency market with greater ease. This broader accessibility could significantly increase demand for Bitcoin.
- Institutional Interest: Bitcoin's potential as a hedge against inflation and its limited supply are attracting the attention of institutional investors. A shift in investment strategies, with even a small percentage of global assets under management moving towards Bitcoin, could have a dramatic impact on its price.
Buckle Up for a Bumpy Ride
The 2024 Bitcoin halving is likely to trigger price volatility in the short term. However, the long-term fundamentals appear strong, with potential for scarcity-driven demand increases and broader market acceptance through ETFs and institutional investment. Investors should carefully consider these factors alongside their own risk tolerance before making any investment decisions. The upcoming months will be crucial for observing how the halving unfolds and its impact on the Bitcoin market.
This article was published on
Last edited on