Bitcoin primed for giant rally ahead of halving in 2024, says market analyst ⋆ ZyCrypto
Bitcoin could be in for a massive bull run ahead of the next halving event. The world’s largest cryptocurrency by market capitalization has already delivered exceptional returns in 2023, up roughly 80% year-to-date. At press time, the crypto asset was trading at $29,495, down over 2.71% in the last seven days.
The bitcoin halving – also known as the “halving” – is an event that halves the rate at which new bitcoins are released into circulation. The reward system is expected to continue until 2140 when the last bitcoin will be mined. Halving is attracting a lot of attention with the expectation that the decreasing number of new Bitcoins in circulation will theoretically drive up demand, leading to price increases.
The most recent Bitcoin halving occurred on May 11, 2020, where the number of Bitcoins entering circulation dropped from 12.5 per block to 6.25 per block. Halving occurs approximately every four years, and the next halving is likely to occur around April 2024.
What to expect
According to popular cryptoanalyst “Ali”, we can gain insight into how BTC prices will behave in the future “by examining the relationship between fees and rewards as well as the cryptocurrency’s historical accumulation or distribution cycles.”
The ratio of fees to rewards is critical to the financial health of the Bitcoin network. As block rewards decrease due to halving events, transaction fees become a critical source of income for miners.
“Higher ratios signal a healthy and sustainable network, which increases investor confidence and demand, and drives the price of BTC higher. Conversely, a lower ratio can raise concerns about long-term sustainability, negatively impacting the price of BTC. Ali explained in a tweet on April 12.
In particular, the shift from accumulation to distribution can be predicted by the fees to reward data on the chain, which are currently increasing.
The Pundit further noted that the indicator suggests the market has entered another accumulation cycle, similar to 2019 and 2020, setting it up for a further rally.
“This indicates a potential price rise leading up to the Bitcoin halving in 2024. Ali added.
Timo Oinonen, an onchain analyst at Cryptoquant, also agreed with Ali’s claims, adding that both the fees of the reward indicator and the 2019-based price model suggest that Bitcoin will reach $46,092 by the summer of 2023.
“After reaching the 2019-based target price of $46,092, it is easy to see Bitcoin reaches $100,000 in the wake of the halving event in 2024″ he wrote.
That said, while the fee-to-reward ratio is a crucial factor in predicting the effects of the halving on Bitcoins price, other factors, such as market sentiment, macroeconomic conditions and regulatory developments, may also play a significant role in determining the price. of BTC.
