According to crypto analysts, the recent rebound in Bitcoin is only the beginning of a rally that will propel it beyond $50,000 next year.
This projection is based on the process of halving, which reduces the supply of new tokens.
Although Bitcoin is currently struggling around $30,000, halving could lead to a potential surge of at least 81%, as noted by Bloomberg Intelligence and Matrixport.
Halving is a periodic event that occurs approximately every four years, which cuts the reward that Bitcoin miners receive in half.
This is part of the process that limits Bitcoin’s total supply to 21 million tokens. Historically, the coin has achieved record highs after each of the past three halvings. The next halving is expected to occur in April 2024.
“Bitcoin cycles bottom around 12-18 months prior to the halving and this cycle structure looks similar to the past ones, albeit many things have changed — while the network is vastly stronger, Bitcoin has never endured a prolonged severe economic contraction,” said Bloomberg Intelligence analyst, Jamie Douglas Coutts.
The recent resurgence of Bitcoin has hit a roadblock due to diminishing prospects of Federal Reserve interest-rate cuts amidst ongoing inflation concerns.
Furthermore, the regulatory crackdown on cryptocurrencies in the US following the collapse of the FTX exchange in November 2022 has added to the gloomy outlook for the market.
“If the collapse of FTX was indeed the bottom of this cycle, then history would suggest that we still have approximately 350 days of ‘accumulation’ before witnessing the characteristic post-halving breakout price action,” said Jacob Joseph, an analyst at CCData.
According to Markus Thielen, the research head at Matrixport, Bitcoin is expected to surge past $65,623 by April 2024, which is more than double the current price.
Despite the optimistic forecast, Bitcoin is still lagging far behind its all-time high of nearly $69,000, which was reached in November 2021, 18 months after its halving in 2020. Last year, the cryptocurrency market crashed as central banks hiked interest rates to combat rising inflation, leading to the implosion of various digital asset companies.
“Bitcoin may once again reach a new all-time high in the future, however, it is unlikely to see the same growth as previous cycles due to increased market size and competition from other digital assets,” said CCData’s Joseph.
In the Asia-Pacific region, Bitcoin saw a slight increase of less than 0.5%, rising to $27,590 as of 8 a.m. in Singapore on Monday. This followed a decline of just over 9% in the previous week. Other smaller tokens, including Ether, Cardano, and Solana, also experienced moderate gains as the trading week commenced.