Bitcoin has risen rapidly in price, from just a few cents to nearly $69,000 at its peak in just 13 years. Despite the fact that Bitcoin is worth only about $21,000 today, many people are sure it will rise.
As you can see, the majority of these optimistic price forecasts utilize various approaches and reasoning to reach their conclusions. For our analysis of Bitcoin’s future value, we’ll focus on patterns between halving events and use 2024 as the deadline since that is when the next Bitcoin halving will happen.
Bitcoin’s halving events are what set it apart. Bitcoin’s code is designed to maintain that the amount of supply grows at a slower rate over time. Because Bitcoin’s source code is public, we can perform a little arithmetic and discover that every four years, Bitcoin’s block reward is slashed by 50%.
The halvings are a convenient reference point to watch Bitcoin’s price development over time. Bitcoin analysts term the period between each halving as a cycle.
The first halving was in November 2012, when the block reward was reduced from 50 to 25 Bitcoins. The second occurred in the summer of 2016. And the most recent was in May 2020, resulting in a reduction from 12.5 to 6.25 Bitcoins.
A little data exploration never hurt
When examining the data between halvings, a few things become apparent. The price at each halving is about 55% below the all-time high from the previous cycle, according to CoinDesk.
The price topped out near $34 in June 2011, when Bitcoin’s first halving took place. By the time of the November 2012 halving, Bitcoin was valued at roughly $12, a drop of about 60%. In 2016, Bitcoin was worth about $650. This was a decrease of around 45% from Bitcoin’s all-time high of over $1,200 in November 2013.
In 2020, Bitcoin’s price fell by roughly 65% from the all-time high in December 2017. When we average those declines, Bitcoin’s price is about 55% less than its previous all-time high, when the halving occurs.
The next halving is expected to occur in May 2024. It’s easy to arrive at a forecasted price for Bitcoin by using simple arithmetic. Bitcoin peaked at almost $69,000 in November 2021, based on past behavior, and it should be about 55% less than that now. If trends continue into the next cycle, bitcoin’s price should be around $30,000.
The amount of Bitcoin that grows between each halving decreases from the previous cycle, according to data.
Bitcoin’s price was roughly $11 in November 2012, shortly after the first halving. It rose to almost $1,100 in December 2013 — a gain of almost 10,000 percent. Bitcoin’s value increased from about $650 at the next halving in July 2016 to a new high of just under $20,000 in December 2017 – a rise of nearly 3,000 percent. Bitcoin grew by nearly 670% during this period from May 2020 when it was trading for approximately $9,000 to its all-time high of just under $69,000 in November 2021.
It becomes more obvious that Bitcoin’s returns decrease with each halving cycle that passes. But what will the price do after the next halving?
On average, each cycle reduces Bitcoin returns by 25%. We subtract a quarter from the previous 670 percent return to get about a 500 percent increase. A jump of this magnitude from our speculative $30,000 price in May 2024 would bring us back to new all-time highs of roughly $150,000.