In 2024, Bitcoin will have its fourth Bitcoin Halving which is predicted to happen around the month of April.
With halving coming up, investors are wondering how this halving will be different from the previous ones especially regarding its impact on the market and mainly Bitcoin’s price.
To answer those questions, we will be looking at how the current condition of Bitcoin is different from when it was during and how the price gain will be compared to previous halvings.
Differences Between 2024 and Previous Halvings
There are a couple of things that will be different in terms of market’s expectations towards the next Bitcoin halving, and how it will impact the market.
The differences can be seen from the outcome of the halving itself and how the innovations around Bitcoin are currently more advanced compared to when it was during previous halvings.
This might potentially raise its transaction volume higher than it was after the previous halvings, prompting a different effect towards the cryptocurrency market, especially towards Bitcoin’s price itself.
Different Outcome of 2024 Halvings
In the 2024 Bitcoin Halving, the main difference that can be seen from other halvings in the past is the block reward cut that will be 50% less than it is right now.
Currently the Bitcoin block reward for each block created by miners stands at 6.25 BTC on top of the transaction fees gathered per each block created which averages on 0.15 BTC per block created.
After the 2024 Bitcoin halving, the block reward will be cut by half to around 3.125 BTC per block created, which overall would make Bitcoin more scarce in the market.
The scarcity comes from the fact that around 76% of the Bitcoin supply is currently being held by long term investors, meaning they will not sell so it is harder to get Bitcoin if you are a new investor.
Since typically after halving there are lots of new investors that want Bitcoin, there will be a huge price increase because higher demand accompanied by scarcity usually increases price.
New investors coming into the market along with old investors that were absent during the bear market might also increase transaction volume which overall will increase the transaction fees gathered by miners and overall making the blockchain more alive.
Different Narratives and Expectations Around Bitcoin
The higher transaction volume overall will also increase the price of Bitcoin, since higher transaction volume equals more interest towards Bitcoin, hence activating the scarcity theory that makes the Bitcoin price go up.
While this is the same for most halvings, the current 2024 halving is different because there might be a much larger transaction volume, due to the innovations that were non-existent in the previous halvings.
These innovations create new narratives and expectations that the previous halvings do not have so there might be more activity in the chain, hence increasing the price of Bitcoin higher.
Bitcoin Spot ETF
The first narrative that was non-existent in the previous halvings is the Bitcoin Spot ETF, which is an ETF that is backed by the Bitcoin asset itself, giving institutional investors with options to buy Bitcoin without really buying Bitcoin.
Increase in Spot Bitcoin ETF transaction volume means an increase in Bitcoin volume because the issuers of those ETFs are obligated to buy the same amount of BTC as the ETF issued.
According to data from The Block, the current ETF volume stands at around $1 Billion to $3 Billion of daily volume overall.
Meaning, there are billions of money moving around daily between Bitcoin itself, prompting the idea of a different price increase than the previous halvings thanks to the support of institutional investors.
Bitcoin Layer Two Blockchains
Another narrative that has been going around is that after the 2024 halving, Bitcoin will be more active than the previous halvings.
This is because now Bitcoin has the help of layer two blockchains, which helps it to process more transactions because developers can now build decentralized applications on top of it.
Before the existence of Bitcoin layer two blockchains, Bitcoin was only a place for transactions, which means users can only send and receive BTC through it.
Now with the help of those blockchains, developers can create applications on top of those blockchain where the transactions of those applications happen on the Bitcoin blockchain, giving more use cases towards Bitcoin, making its volume transaction higher than previous halvings.
Also with the help of those blockchains, Bitcoin can process transactions faster thus enabling new innovations that were non-existent in the previous halvings.
Bitcoin DeFi
One of the examples of the innovation is the Bitcoin DeFi ecosystem that has just come up recently because of existing layer two blockchains that have managed to connect and help the Bitcoin Blockchain.
According to data from DeFillama, there are currently $2.136 Billion being locked in the Bitcoin DeFi ecosystem.
This means that people are using the Bitcoin Blockchain more than before, because there are new DApps or Decentralized Applications that cater to the needs of Bitcoin enthusiasts and DeFi enthusiasts.
Mind you that this data is from the current 2024 pre-halving market. Think of how it's going to be after the halving, potentially there will be an increase of volume that might lead to a significant increase in Bitcoin’s price.
Bitcoin Ordinals Inscriptions
Not only does the Bitcoin DeFi gives more utilities to Bitcoin holders, there is also a new innovation called the Bitcoin Ordinals with its inscription mechanism.
This mechanism lets Bitcoin essentially have its own non-fungible token or NFT ecosystem, giving holders more things to buy with their Bitcoin.
According to data from Dune Analytics, there are already more than 61 Million encryptions being done, meaning this innovation is put to use, essentially generating transaction fees for more than 6,000 BTC, showing that it helps increase transaction volume and fees on the Bitcoin Blockchain.
Bitcoin’s 2024 Price Expectations Compared to Previous Halvings
As you can see from the data above, there are lots of new innovations that might potentially lead to a different price movements after the 2024 Bitcoin Halving.
Taking a look at previous halvings, it can be seen that the price increase of Bitcoin is changing overtime, essentially also being cut down to approximately half than it was before.
After the first halving, BItcoin’s price increased around 3,836.32%, and in the second one the price increased 2,992.07%.
The growth of Bitcoin price is essentially also cut by half in this case, where this also happens in the last halving, where the price increase went down from rising 2,992.07% to 1,010.78%.
By this pattern, there is a probability that Bitcoin will only rise to around 500% after the last halving, which makes sense because looking at the Fibonacci Extension tool, a 500% increase means reaching the 161,8% area which is the next highest target for Bitcoin at around $100,000 per BTC.
Things Might be Different
But as said before, things might be different because there are lots of new innovations in the Bitcoin space that might trigger a break of pattern from the previous cycle that triggers the same or higher percentage of price increase compared to the previous cycle.
Taking a look at the graph above, the Fibonacci Extension tool shows the highest target to be around $250,000 to $300,000 which will take a little more than the previous halving gains which is a 1,800% to 1,900% price increase.
This might be possible seeing as the next bull market will be supported by not only retail investors but also institutional investors, prompting a potential increase in buying volume that will lead to reaching those new highs.
Conclusion
Overall the next target of the bull market cannot be determined precisely but conditions surrounding Bitcoin can be a helping tool to see where it might potentially go.
In terms of Bitcoin itself, there is little to zero chance of the bull market not happening so right now investors need to set up a good strategy to capitalize on the movement.
As for altcoins, all of it will follow the price movement of Bitcoin, but regarding its percentage rise count, every altcoins will differ depending on each of its own development and adoption.
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