Bitcoin has experienced its longest stretch of negative year-over-year returns in its history, 15 months extending from Feb. 2022 to June 2023.
This record-breaking downturn surpasses the previous streak of nearly a year from Nov. 2014 to Oct. 2015.
According to a recent Pantera Capital letter to investors, this prolonged downturn may have reached its limit.
Pantera commented that a recent series of fortunate events, such as the XRP ruling and endorsements from BlackRock and other major financial entities, along with the upcoming Bitcoin Halving expected in April 2024, could form a strong foundation for an impending bull market for digital assets.
Bitcoin Halving 2024.
The Bitcoin Halving, slated for Apr. 20, 2024, will adjust the release of Bitcoins by half next year.
At present, the blockchain rewards miners with 6.25 bitcoins every ten minutes, and this “block reward” halves every four years, a process expected to continue until the year 2140, when the aggregate of Bitcoins in circulation will hit the pre-determined cap of 21 million coins.
The next Halving will reduce the mining reward from 6.25 BTC to 3.125 BTC per block. Panterra cited The Efficient Markets Theory, which suggests that this scheduled event should already be factored into the current price. However, if demand for new Bitcoin remains steady and the supply halves, the price could increase.
Historically, demand for Bitcoin has increased leading up to the Halving event in anticipation of a price increase. Panterra noted that Bitcoin had typically bottomed out 477 days before the Halving, ascended leading into it, and then experienced a significant surge afterward.
Bitcoin Halving price rally prediction.
On average, the post-halving rallies have spanned 480 days, from the Halving to the peak of the subsequent bull cycle. Using these historical patterns, Pantera’s analysis suggests that Bitcoin should have reached its lowest point on Dec. 30, 2022.
However, the actual low occurred a month earlier, on Nov. 9, 2022, during the FTX collapse. Pantera’s report anticipates a rally heading into early 2024, followed by a strong surge after the Halving. The current price of Bitcoin is outpacing Pantera’s projection to $35,500/BTC at the Halving date, currently sitting 7% above that forecast.
The model used by Pantera for analyzing the impact of Halvings examines changes in the stock-to-flow ratio across each event. Each Halving’s effect on price is expected to diminish as the reduction in the supply of new Bitcoins decreases.
If this trend holds, the next Halving, per Pantera’s projection, would see Bitcoin climbing to $35k before the Halving and spiking to $148,000 afterward.
At the time of writing, Bitcoin is priced at $26,461.42, up 1.79% in the last 24 hours but down 7.18% over the past week.
Despite these market fluctuations, the upcoming Halving and its potential implications remain a significant factor influencing Bitcoin’s market performance, per Pantera’s analysis.