Over the course of Bitcoin's (BTC +2.41%) impressive run in the last 14 years, it has proved naysayers wrong time after time as it smashed through previous all-time highs. Since hitting its most recent historic high of around $68,000 in November 2021, the next hope for investors is that its price will one day reach six figures.
Predictions for a $100,000 Bitcoin are common these days. But often they lack substance, evidence, or any legitimate reasoning. Let's try to change that.
CRYPTO: BTC
Key Data Points
To paint a clearer picture of what might be in store for Bitcoin, our analysis needs to use data. Knowing where Bitcoin has been can help formulate more-realistic estimates on where it could be headed, rather than using wishful thinking.
As we look at the data, a few things become clear. First, Bitcoin's price behavior is influenced significantly by an event known as a halving. And due to the halving's heavy influence, we can even project when the cryptocurrency will hit a particular price. Before getting into this, though, an understanding of halvings is needed.
A true Bitcoin feature
Halving is what helps make Bitcoin unique due to its role in mining and the creation of new bitcoins. When miners successfully mine a block, they are rewarded with freshly minted bitcoins. This is the primary way that new bitcoins enter circulation.
When a halving occurs, it cuts the amount of bitcoins awarded to miners in half, thereby slowing the rate at which new coins enter circulation.
These halvings take place every 210,000 blocks, or roughly every four years. The first halving occurred in November 2012 and dropped the block reward from 50 bitcoins to 25. The second was in the summer of 2016. And the most recent was in May 2020, resulting in the reward being cut from 12.5 to 6.25 bitcoins.
What Bitcoin could look like by the next halving
As we analyze the data, it becomes evident that Bitcoin's price at the time of each halving is roughly 50% less than its previous all-time high. This is crucial to understand so that we can more accurately estimate where it could be headed.
If the price of Bitcoin at the time of the halving is about 50% of the previous all-time high, we can surmise that in May 2024, Bitcoin could be worth around $34,000 based on its current record high of roughly $68,000.
From here, we need to look at what happens after the halving. With the halving reducing the rate of new coins entering circulation, Bitcoin's price tends to make its most significant gains after this as the market adjusts to a more limited supply.
When we look at Bitcoin's performance after past halvings, two things become clear. On average, Bitcoin returns about 25% less with each new cycle, and a new record high is typically made a year and a half after the halving.
Since we know that the last cycle produced a 670% return, we arrive at around a 500% increase for the coming halving. An increase of this size from our speculative $34,000 price in May 2024 would result in a new all-time high of more than $200,000 sometime in the second half of 2025.
These estimates and timelines are speculative. But unlike other predictions, this scenario takes data into account and relies on verifiable trends revolving around halvings. Until the data proves otherwise, it is all we can base estimates on.
As such, with the data's integrity still intact, buying the crypto today could prove to be extremely lucrative since its price hovers at about $25,000.
Should Bitcoin behave like it has in the past and reach our projected $200,000; that would represent an increase of 700% from today's price. Even better, time is on our side: 2025 remains off in the distance.
