Forecasting ahead of the Bitcoin halving

Although the date is not yet certain, forecasting sees the next halving of Bitcoin for the spring of next year. 

In this regard, predictions are already flowing in regarding the price Bitcoin will have after halving. 

Bitcoin’s price forecasting ahead of the next halving 

It is worth mentioning that halving does not have a direct impact on the price.

In fact, it is merely the sudden halving of the reward given to the miners. Exactly at block number 840,000 the reward given to the miners will drop from the current 6.25 BTC to 3.125. 

Currently we are about at block number 808,000, and since more or less one block is mined every 10 minutes or so, doing the math the 840,000th block is likely to be mined around April next year. 

The fact is that the reward given to the miner who succeeds in mining a block is in fact the only existing system for creating new BTC. So the halving is also Bitcoin’s only monetary policy measure, which is also absolutely predictable. 

Typically since mining Bitcoin means consuming a lot of electricity, miners who receive the reward for mining a block tend to sell much of the collected BTC because the electricity has to be paid in fiat currency. 

So a halving of the reward should lead to an inevitable reduction in the BTC that miners sell every day. 

It goes from 900 new BTC created per day to 450, and given that of those 900 BTC that are currently created every day the majority may end up being sold right away, or nearly so, the reduction in supply in the markets should be virtually inevitable. 

However, it is not enough to reduce supply to drive the price up. It also needs demand to remain constant, or fall less than the supply (or go up). 

Impacts during past cycles

So far there have been three halvings, in 2012, 2016 and 2020, and in all three cases a big bull run was triggered after a few months. 

However, the impact has been diferent each time. 

In 2012 the halving occurred in November, and the bullrun started shortly after, in 2013. Bitcoin’s price made a boom that was never seen again after that, both in proportion and speed. 

In 2016 the halving occurred in July, and the bull run did not start until late 2017. It was still a significant increase in value, from about $1,000 to about $20,000, but of much smaller proportions than the previous bullrun. 

In 2020 the halving occurred in May, and until November the bull run did not start. This occurred in two phases, one until April 2021, with the price reaching as high as $64,000, and then a second phase, after a sort of small intermediate collapse, which took it to $69,000 at the end of the year. 

Therefore although a bull run has been triggered in the past after all three halvings, it has never been triggered on the same day as the halving or in the following days, but in the following months. Notably, the halving always occurred earlier in the year it was supposed to occur, while the bull run almost always lasted approximately 12 months. 

However, it is not certain that something like this will happen in 2024/2025. 

Forecasting regarding Bitcoin’s future halving

Many predictions are already circulating regarding the price that Bitcoin might reach after the next halving. 

Some argue that it will not behave as it has in the past, as the current monetary landscape is one of large central banks being in the midst of restrictive monetary policy.

This scenario is expected to continue in 2024, while in 2025 things may change. 

What’s more, if the Fed and ECB are indeed in this situation, the Chinese central bank on the other hand is in a different situation, as the official inflation rate in China is as low as 0.1%, and the People Bank of China could also decide to opt for an expansionary monetary policy. 

However, it must be said that most of the forecasts seem positive. 

First of all, there are those who argue that the 2021 highs, or about $70,000, could be reached again. 

However, it is important not to forget that in order for the price to rise it is not enough to reduce supply, but it is also necessary for demand to at least remain constant. This is why in the past the bull run has never started in the days just after the halving. 

There are also those who argue that this time the fateful $100,000 that was not reached in 2021 could be reached, although everyone somewhat expected it. 

There are also those who go so far as to argue that this time it could reach $250,000 instead. 

If we consider the three peaks of the three bull runs (2013, 2017, and 2021), namely $1,100, $20,000, and $70,000, we find that the second was greater than the first by 1,700%, while the third was greater than the second by “only” 250%. 

In fact if the next peak was at $250,000 there would have been another increase of about 250%, while if it was $100,000 it would have been only 42%. 

The reasons for the increases

Although many believe that the price of Bitcoin is primarily affected by the macroeconomic situation and interest rates, PlanB pointed out that for Bitcoin, what applies to gold and stocks, for instance, does not seem to apply at all. 

Instead, it seems that Bitcoin’s long-term price path is most affected precisely by its scarcity, and thus by the halving event. 

That is to say, while macroeconomic phenomena, and the monetary policies of central banks, can certainly influence the price of BTC in the short run, in the long run, on the other hand, a trend related to its internal monetary policy, and the loss of real purchasing power of fiat currencies, seems to prevail. 

We will probably have a confirmation or denial of this hypothesis in the 2024/2025 biennium.