With the crypto winter receding and the optimism that often accompanies the new year, it's worth exploring what 2024 might have in store for Bitcoin (BTC -2.10%). Can it keep up the momentum from last year? Or is there a correction in the forecast?
Let's take a deeper dive and see what investors should expect in 2024 -- and why a $100,000 price tag might not be impossible.
Image source: Getty Images.
Getting a lay of the land
Before getting into estimates, it's worth considering and recognizing the general overview of Bitcoin's current position. To start, Bitcoin has more than doubled in value since the brutal crypto winter in 2022.
Like any market, ecosystem, or natural phenomenon, periods of contraction are followed by growth, and crypto seems to be following this pattern. There can be some ambiguity when it comes to measuring the duration of crypto bear markets, but the overwhelming consensus is that this was one of the longest bear markets in crypto's history. With such a drastic correction, a significant resurgence was likely overdue.
But after rising more than 150% in 2023, Bitcoin would need to more than double in value again, increasing about 115% from today's prices to reach $100,000. Bitcoin is no stranger to making impressive gains in short amounts of time, but does it mean that it can hit the coveted six-figure mark?
How Bitcoin can get to $100,000
To answer this question as simply and holistically as possible, you need to account for just two variables: supply and demand. This year Bitcoin is going to undergo its fourth halving. The halvings form the basis of Bitcoin's monetary policy and underpin its increasing scarcity by cuttng Bitcoin's supply growth rate in half roughly every four years (or 210,000 blocks added to Bitcoin's blockchain).
At one point Bitcoin's supply growth rate exceeded 10%, but it has been cut to about 1.75% today. But in April this year it will fall to just 0.85%. This halving process will continue until all 21 million coins are mined sometime in 2140; about 19.6 million circulate today.
Complex code enforces the halvings, but its concept is relatively simple. A reduction in the rate of supply growth creates additional pressure on prices even if demand stays constant. This is why Bitcoin increases an average of 128% during the year there is a halving. If a similar pattern unfolds this year, Bitcoin's price will exceed $100,000 when measured from its current price of about $46,000 today.
Yet there is an additional factor to consider that may influence supply and demand and make this halving unlike any in Bitcoin's history. Currently, there are only 2.3 million Bitcoins available for purchase on exchanges. This is the lowest level seen since 2017. Most importantly though, this next halving will be the first time in Bitcoin's history that there are fewer coins on the market than at the time of the previous halving.
For all of Bitcoin's history, the total supply on exchanges grew, even as halvings passed. But that changed in 2020. The explanation for this is likely multifaceted but the most concise would be that demand has finally started to outpace supply. Now Bitcoin's historically low supply is going to come under even greater pressure with a halving on the horizon.
Bitcoin might have more in store for 2024
It's an exciting time for Bitcoin. The Securities and Exchange Commission yesterday said it approved the first spot Bitcoin exchange-traded fund (ETF). Developments of technological innovations like Layer-2 solutions, such as Stacks, are progressing. And for the first time in almost three years the general prospect of a bull market is looming.
Accounting for these factors along with the next halving and an unprecedented supply shortage, the likelihood of Bitcoin fetching a $100,000 price tag is surely in the cards. In fact, it wouldn't be hard to imagine a scenario where Bitcoin flies past the six-figure mark in 2024.
