One of the biggest criticisms of the cryptocurrency sector is the inherent volatility of assets. Prices can swing so wildly that an investor can make incredible returns within a few minutes or lose all of their investment. Even though cryptocurrencies are popularly used for their function as stores of value, there is always the risk of loss, especially among holders only in it for the short term.
Bitcoin (BTC) is the world’s first major decentralized cryptocurrency and the most popular. It has a market dominance of 52%, according to CoinMarketCap data, and has given holders more than 125% in returns since January. Despite the impressive increase this year, the world’s king coin has definitely seen better days.
Factors Affecting Bitcoin’s Price
Like many other cryptocurrencies, Bitcoin is affected by general market forces and may rise or fall in response. Known factors that affect the price of Bitcoin include:
- Supply and Demand: The price of Bitcoin responds to the perceived value of the asset depending on general market sentiments. Bitcoin rises when people, regardless of their reasons, believe it’s of high worth and buy more. On the other hand, losing faith in the king coin may cause people to sell, causing the price to fall.
- Adoption: Prices are likely to rise as people buy and use Bitcoin. Since its launch in 2009, Bitcoin’s level of adoption has increased considerably to the point where people are now comfortable using it in exchange for goods and services instead of fiat. Several businesses, including major brands like Starbucks, Twitch, and Newegg.com, allow customers to make Bitcoin payments in addition to fiat currency. Adoption has also spread to online gambling, where players can bet with Bitcoin at all crypto casinos, even if it is a casino not on gamstop. Accepting Bitcoin allows these establishments to serve players worldwide and offer more bonuses in addition to a higher return-to-player (RTP) rate. Furthermore, crypto casinos offer increased security, privacy, and anonymity.
- Competition: In 2013, less than 100 active cryptocurrencies were trading on crypto exchanges or platforms. Today, CoinGecko data shows at least 11,000 active cryptocurrencies with a combined market cap of $1.492 trillion. Competition is also the reason Bitcoin’s dominance fluctuates, plunging from 71% in 2019.
Predictions for the Bitcoin Market
The Bitcoin market has no shortage of predictions, most forecasting a bull market. For instance, Cory Mitchell, an analyst with Trading.biz believes that Bitcoin will see an “acceleration phase” that pushes it over $69,000 sometime in mid-2024. Mitchell considers this possible, highlighting the king coin’s history of achieving significant gains following a bottom. The analyst argued that BTC jumped 1,200% within 100 days in 2013, 1,900% in under a year in 2017, and 400% in 140 days in 2020. However, he warned that there could be several periods of price plunges along the way.
Mitchell’s forecast is modest compared to others, considering expected events in the Bitcoin market for next year. The crypto market expects the next Bitcoin halving sometime in April 2024. The halving is a network event that happens every 210,000 blocks, which takes roughly 4 years. At each event, the amount of Bitcoin rewards miners receive for each block produced reduces by 50%. At the next halving, block rewards will fall from the current 6.25 BTC to 3.125 BTC. Historically, the halving has preceded impressive spikes in the price of Bitcoin, even though they do not happen immediately.
Another bullish factor for Bitcoin next year is the expectation that the United States Securities and Exchange Commission (SEC) will greenlight a spot Bitcoin exchange-traded fund (ETF). Throughout Bitcoin’s history, the SEC has rejected all ETF proposals, citing problems with market manipulation and fraud. Fortunately, the applications currently reviewed by the SEC seem to have considered these problems, especially since some have introduced surveillance-sharing agreements (SSA), which promote market transparency.
The above reasons have propelled most forecasts into bullish territory. For instance, Standard Chartered predicted in April that Bitcoin will hit $100,000 by the end of 2024. By July, the company revised this forecast to $120,000, stating a 20% upside to the forecast. In a report, Standard Chartered analyst Geoff Kendrick said increased miner profitability will drive prices higher despite a reduction in block rewards.
Recently, Morgan Stanley predicted that Bitcoin will cross its all-time high of $69,000 after the halving. According to the leading investment bank, a bull cycle will soon begin, partly triggered by people already racing to reaccumulate the king coin as the market expects a decline in supply. However, the bank did not specify an expected price point.
International asset manager AllianceBernstein Holding LP joined the growing list of Bitcoin faithfuls, putting Bitcoin at $150,000 in 2025. According to company analyst Gautam Chhugani, this will happen due to next year’s halving.
While it is difficult to offer a specific maximum limit for Bitcoin’s price trajectory next year, it is safe to assume that 2024 will likely be bullish for the world’s king coin due to several events, including the halving and a potential ETF approval.
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