While the cryptocurrency market has still a lot of recovering to do, various experts are already predicting the future price of Bitcoin (BTC), which they correlate it with the digital asset’s next halving event- expected to take place around two years from now.
A halving event is when the block reward for mining new Bitcoin is reduced by 50%. This happens approximately every 210,000 blocks or around every four years, and serves to control the inflationary rate of BTC. By reducing the block reward, the amount of new Bitcoin entering circulation is also reduced, helping to keep prices stable, if not fuel them higher.
The last Bitcoin halving event occurred in May 2020, and the next one is expected to happen in May 2024.
Currently, BTC is trading 56% lower from its all-time high of nearly $69,000 in November 2021. Nevertheless, with the next halving event looming on the horizon, many analysts remain optimistic about BTC’s long-term prospects and believe that it has significant upside potential.
In fact, Dennis Parker, a crypto analyst, recently took to Twitter to share a price chart of Bitcoin’s past performance. The chart shows that, following each halving, there is an increase in price. This suggests that the next halving could lead to a similar surge.
While the colors on the rainbow chart are based on a logarithmic regression, it is important to note that this doesn’t necessarily mean that they have any scientific basis. However, they could still provide valuable insight into Bitcoin’s long-term price movement.
— Dennis Parker (@Xentagz) May 22, 2022
Furthermore, as any Bitcoin enthusiast will tell you, the halving is a big deal as it’s widely considered to be a bullish event for the price of BTC. And it looks like the next halving could be a doozy. At the time of this writing, the price of BTC is hovering around $30,000 – and if history repeats itself, we could see it spike in the lead-up to the halving. That’s because as demand for Bitcoin increases and there are fewer new coins being created, the price tends to go up.
It will be interesting to see how the market reacts to the next halving and whether or not Parker’s predictions hold true.
Meanwhile, in a recent tweet, PlanB, a Dutch institutional investor and the creator of the stock-to-flow (S2F) live model, posted a chart that shows the current value of BTC in relation to its S2F model. The S2F is a way to value Bitcoin while taking into account its scarcity as an asset. The model works by dividing the current supply of BTC by the amount that is produced each year. This gives us the “stock-to-flow ratio” which is a measure of how scarce an asset is.
The model predicts that Bitcoin will continue to increase in value as its scarcity increases. This is because there are a limited number of Bitcoin that will ever be produced, and the demand for the apex cryptocurrency is increasing as more people learn about and use it.
The model has been accurate in predicting past Bitcoin price movements, and is one of the most popular ways to value Bitcoin today.
In his tweet, PlanB said his model still points to BTC hitting $500K per coin after the 2024 halving event.
Original 2019 $55K S2F model seems to fit better than later $100K update. Interestingly a refit based on 18m average S2F ratio and 3 yrs new data confirms the original model. The bad news: $100K was probably too high. The good news: model still points to $500K after 2024 halving. pic.twitter.com/O9kCC2In5j
— PlanB (@100trillionUSD) May 21, 2022
Disclaimer: This article is provided for informational purposes only. It is not intended to be used as investment or financial advice
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