In a world where cryptocurrency is rapidly gaining traction, Blockware Solutions, a prominent player in the mining-related services, has made a bold prediction about Bitcoin's price trajectory leading up to its next halving cycle in 2024.
Dive into this article to uncover the multifaceted reasons behind their forecast and the potential implications for the broader crypto market.
Contents
Multiple Reasons for BTC Price Surge During Halving
On August 18, 2023, Blockware Solutions, known for its mining-related services, expressed the view that "Bitcoin's price could potentially reach $400,000 during the next halving cycle."
In their report, Blockware Solutions emphasized that "the halving has the most significant impact on Bitcoin's price," and they listed several reasons why the BTC price might surge during the 2024 halving.
Reduced Selling Pressure Due to Miner Withdrawal
One reason for the potential price increase during the halving is the "reduction in selling pressure due to the withdrawal of small-scale miners." Those individuals and companies engaged in Bitcoin mining are referred to as "miners." Blockware Solutions explains that "miners are a primary source of selling pressure in Bitcoin."
This is because "to cover the operational costs of BTC mining, a significant portion of the BTC earned as mining rewards must be sold." Blockware Solutions predicts that "with the halving of mining rewards, small-scale miners might exit," leading to a significant reduction in selling pressure, which in turn could drive up the BTC price.
The company also mentions that "if the BTC price post-halving is $35,000, the value of BTC mined annually could drop from $11.5 billion to $5.7 billion," implying a potential "reduction in annual selling pressure by miners by $2.3 billion."
Creation of New Demand Due to Halving
Another reason for the potential price surge during the halving is the "increase in Bitcoin demand due to the halving." Blockware Solutions states that "many market participants understand the effects of halving on supply," and historically, demand has increased in the months following a halving.
Blockware Solutions believes that the combination of reduced supply and increased demand is a powerful signal for price appreciation.
Halving is Not Fully Priced In
While some in the cryptocurrency industry believe that "the effects of halving are already priced in," the report suggests that "it's impossible to fully predict its impact before the halving."
Although the timing of the halving can be anticipated, the potential increase in selling pressure due to new miners entering the market and the possible decrease in selling pressure due to miner withdrawal post-halving make it challenging to fully predict the halving's impact.
Furthermore, concerns that "halving might negatively impact Bitcoin's security" could be dispelled if the halving passes without issues, leading to increased positive sentiment.
Continued Price Increase in Halving Cycles
Blockware Solutions also explains that during the halving cycle, there's a repeated pattern of "halving → bull market → bear market → recovery." The company also states that "no one who has held Bitcoin for more than five years has suffered a loss," and they highlight the potential for a 12-fold increase in Bitcoin's price post the 2024 halving.
Many BTC Holders Don't Want to Sell at Current Prices
In the cryptocurrency industry, some point out the potential weakness in price increase due to halving. However, Blockware Solutions explains that "less than 10% of BTC has moved in the past month, indicating that many BTC holders have no intention of selling at current prices."
Given the trend of reduced selling pressure post-halving, a more significant bullish market might emerge after this halving.
The company also compares Bitcoin to gold, highlighting BTC's advantages and stating that "after the 2024 halving, BTC's inflation rate will be less than 1%, which is less than half of gold's."
While various predictions exist for Bitcoin's price post-halving, several forecasts exceed $400,000. Notably, cryptocurrency analyst Michaël van de Poppe predicted in late June 2023 that "the BTC price could potentially surge up to 15 times leading up to the 2024 halving."