A Shift in Dynamics: Supply and Demand
Bitcoin, the world’s original cryptocurrency, had a remarkable 2023 with a surge of over 150%. Now, as 2024 unfolds, it appears that Bitcoin’s trajectory continues to impress. The reasons behind this potential growth lie in the evolving dynamics of supply and demand, as well as historical patterns. If the trend from previous years repeats itself, Bitcoin could reach the highly coveted $100,000 mark, reflecting a gain of more than 120%.
A Gradual Scarcity
Bitcoin’s maximum supply is capped at 21 million coins, with scarcity being a crucial factor in determining its value. Every 210,000 blocks, roughly four years, Bitcoin’s supply growth rate is halved. This reduction ensures that the remaining 1.4 million coins are gradually introduced into the market, ultimately ceasing in 2040. As we approach the next halving in April 2024, the growth rate will decrease to 0.875%.
Supply and Demand Dynamics
While other factors influence Bitcoin’s price, basic supply and demand principles play a significant role. During halving years, prices exhibit a tendency to rise due to the increased competition for a diminishing supply. Importantly, demand does not have to surge for prices to climb. The reduced growth rate alone can exert upward pressure on Bitcoin’s price.
Past Performances and Future Potential
Historical data reveals that Bitcoin tends to increase by an average of 128% during a halving year. Although past performance does not guarantee future results, if this pattern recurs in 2024, Bitcoin’s price could approach $96,000. While it falls short of the six-figure mark, it signifies a substantial leap in value.
A Remarkable Shift in Supply and Demand
The upcoming halving in 2024 marks an unprecedented milestone for Bitcoin. For the first time, there will be fewer Bitcoins available than at the previous halving. Previously, Bitcoin’s supply continuously expanded, but with the most recent halving in May 2020, the tide turned. Data suggests that demand finally surpassed supply, resulting in a dwindling number of available Bitcoins. Since March 2020, the market’s available supply has dropped by almost 30% from 3.2 million Bitcoins to 2.3 million.
The Influence of Committed Investors
Resilient Bitcoin investors who steadfastly hold onto their coins during challenging periods played a significant role in this supply shift. These long-term holders, even during the crypto winter, continued accumulating Bitcoin, bolstering their positions. Today, they collectively hold approximately 14.78 million coins, approximately 75% of Bitcoin’s total circulating supply.
An Unprecedented Scenario on the Horizon
As the April halving approaches, the scarcity of available coins and the slowdown in supply growth put Bitcoin in truly uncharted territory. The combined effect of reduced supply and the halving event may propel Bitcoin’s price significantly. The magnitude of this supply crunch introduces a compounding impact that should sufficiently drive Bitcoin past the $100,000 milestone.