Is it too early to talk about Bitcoin at $150,000?

Right now, most investors will be grateful Bitcoin (BTC -0.21%) prices reach $20,000. The Spectacular Collapse of Cryptocurrency Exchanges FTX has pushed down the price of Bitcoin to the $16,000 level. And some traders are now suggesting that Bitcoin could touch $15,000 or lower before ever seeing $20,000 again.

So it’s interesting to see California-based crypto hedge fund Pantera Capital post what at first glance appears to be a ridiculously high price target of $149,000 for Bitcoin. According to Pantera Capital, the one catalyst that has the potential to drive Bitcoin significantly higher in the near future is the next Bitcoin halving, scheduled to take place in March 2024. But how realistic is this price target?

The Significance of the Bitcoin Halving

In each Bitcoin halving, the reward for mining a new block on the Bitcoin blockchain drops by half. Today, for example, Bitcoin miners receive 6.25 bitcoins every time they successfully mine a new block. When the next Bitcoin halving happens in March 2024, the size of the reward will drop to 3,125 bitcoins. All of this is controlled algorithmically, ensuring that Bitcoin miners all over the world know exactly when this halving event is going to happen.

Image source: Getty Images.

It also ensures that investors around the world know exactly when it’s going to happen, which is what makes the halving event so special. There have been three Bitcoin halving events in the past (2012, 2016, and 2020), and each followed a similar pattern: the Bitcoin market bottoms out about 15 months before the halving, then a gradual rise. in the price of Bitcoin heading into the halving, and then a massive price rally afterwards for a period of about 15 months.

The road to $149,000

So if you apply the same logic to the next Bitcoin halving in 2024, we should expect a similar bullish run for Bitcoin. Running the numbers, Pantera Capital calculated that there will be a bottom for Bitcoin by the end of November, a gradual rise into 2023 and early 2024, and then a massive explosion afterwards. This is based on modeling past Bitcoin halving events, then extrapolating forward.

According to Pantera Capital, Bitcoin typically bottoms 477 days before the halving, then peaks in the bull market cycle about 480 days after the halving. Even if you are not bullish on Bitcoin, you have to recognize that there is a beautiful symmetry to all of this. Pantera Capital now predicts that Bitcoin will rise to $36,000 by March 2024 and then skyrocket to $149,000 thereafter.

Warnings and caveats

The big caveat here is of course that past performance is no guarantee of future performance. Just because an event has happened three times in the past does not mean it will happen again. Three events is still a very small sample, and the price of Bitcoin is so volatile that we really don’t know what’s going to happen in the future. Some of the smartest investors in the world are convinced that Bitcoin will go to zero. So don’t go out and bet your house on another Bitcoin rally.

Keep an eye out for 2024

That said, the big Bitcoin halving in 2024 could be the kind of big narrative story that unites crypto investors around the world. In a sort of self-fulfilling prophecy, crypto investors will think they need to get in early to profit from the halving, so they will buy Bitcoin while it is still trading below $20,000. This in turn will push Bitcoin even higher. As more investors see this happening, they will also start buying, leading to even more momentum. Finally, as we get to 2024, Bitcoin appears to be following the exact trajectory promised by the model.

But so what? Remember what happened this year with Ethereum, and the grand narrative story — The Merge — that promised to unite crypto investors worldwide. Everyone was excited that this could be a truly defining moment for crypto, with many predicting that Ethereum would skyrocket in value. But what did we get? Ethereum is still down more than 70% in the last 12 months, and some investors are warning that Ethereum could fall below $1,000 from today’s $1,200 level.

So take every Bitcoin projection with a grain of salt and do your own due diligence. There is room to hope that Bitcoin will skyrocket in the next few years, but just don’t be fooled by anyone promising that another massive Bitcoin rally is bound to happen anytime soon.