Since its genesis, Bitcoin’s future has been designed according to a strict mathematical equation. The founder of Bitcoin and blockchains, Satoshi Nakamoto, designed Bitcoin’s blockchain to run itself according to rules that govern the ceiling of Bitcoin tokens issued, as well as planned halving events that would see miners earning fewer tokens over time, creating scarcity of the token.
Pantera Capital, a crypto hedge fund, has been keeping tabs on Bitcoin halving events taking place on the chain. The company now predicts Bitcoin to reach $35,000 by its next planned halving event in 2024, and $148,000 after the event.
The hedge fund managing assets worth over $4.2 billion noticed a key pattern in Bitcoin’s progression, closely tying its price changes to upcoming halving events.
“Bitcoin has historically bottomed 477 days prior to the halving, climbed leading into it, and then exploded to the upside afterwards. The post-halving rallies have averaged 480 days – from the halving to the peak of that next bull cycle.”
Pantera’s prediction model expected Bitcoin to drop in price in December 2022. In actuality, Bitcoin troughed in November 2022, after the events of FTX’s collapse.
Accordingly, Pantera expects Bitcoin to rally twice in 2024, once at the start of the year, and another time after the halving event set in the same year.
Moreover, although Bitcoin has recently experienced a sharp drop in price, Pantera reports that Bitcoin is actually outperforming forecasts by 7%, expecting the token to reach $35,000 by next year’s halving event.
What’s even more interesting is that the company expects Bitcoin to reach $148,000 in value after the 2024 halving event.
“The 2020 halving reduced the supply of new bitcoins by 43% relative to the previous halving. It had a 23% as big an impact on price.
The next halving is expected to occur on April 20, 2024. Since most bitcoins are now in circulation, each halving will be almost exactly half as big a reduction in new supply. If history were to repeat itself, the next halving would see bitcoin rising to $35k before the halving and $148k after.”
“Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It’s completely decentralized with no server or central authority,” reads the introduction of Nakamoto’s paper, titled Bitcoin v0.1 released .
“The software is still alpha and experimental. There’s no guarantee the system’s state won’t have to be restarted at some point if it becomes necessary, although I’ve done everything I can to build in extensibility and versioning.”
Satoshi’s paper goes on to explain how Bitcoin trading and mining works, citing “I made the proof-of-work difficulty ridiculously easy to start with, so for a little while in the beginning a typical PC will be able to generate coins in just a few hours. It’ll get a lot harder when competition makes the automatic adjustment drive up the difficulty.”
However, among the keynotes Nakamoto included in his paper are ones regarding the token’s total circulation limit and details on future halving events on the chain.
“Total circulation will be 21,000,000 coins. It’ll be distributed to network nodes when they make blocks, with the amount cut in half every 4 years.
first 4 years: 10,500,000 coins
next 4 years: 5,250,000 coins
next 4 years: 2,625,000 coins
next 4 years: 1,312,500 coins
When that runs out, the system can support transaction fees if needed. It’s based on open market competition, and there will probably always be nodes willing to process transactions for free.”
Halving events are a common occurrence among cryptocurrencies (such as Litecoin) as the process allows for tokens to scale in value by creating intentional scarcity. Think of other valuable commodities, such as gold. The more scarce gold gets, the lower the supply, and the higher the demand for it, hence increasing its value by default.