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Will the Bitcoin Halvening in 2024 Trigger Another Massive Bull Run?
The price of Bitcoin seems to follow a consistent quadrennial trend. That is, it pumps massively every 4 years. One of the biggest triggers behind these quadrennial bull runs is the Bitcoin Halvening.
In short, approximately every 4 years (or 210,000 blocks), the Bitcoin Network cuts its issuance rate of new BTC in half. This trend will stop in the year 2140, and at that point in time all 21 million BTC will be in circulation.
As it stands, more than 90% of all BTC are already in circulation. The relative effect of this next halvening (taking place sometime around May 2024) is smaller compared to previous halvenings.
The question on everyone’s mind is, will the 2024 halvening trigger another bull market?
A Diminishing Effect
One speculation against this halvening having a similar effect as previous ones is that relatively speaking, this one will have a diminished effect. That is, in nominal terms, the number of bitcoin being released every block will be reduced from 6.25₿ to 3.125₿, a difference of only 3.125₿.
The previous halvening saw a drop from 12.5₿ to 6.25₿, a difference that is twice as large as the one coming next. Similarly, the halvening in 2016 dropped from 25₿ to 12.5₿.
Accompanying the drop in the amount of bitcoin per block comes a corresponding (but not proportional) increase in the price of bitcoin.
The rise in bitcoin’s price in the 2017 bull run was about 40x ($500 – $20,000), and the 2021 bull run was about 20x ($3,000 – $60,000). Funny enough, the numbers seem to be pointing to a 10x increase in bitcoin for the hypothetical 2024 bull run.
It is worth mentioning that within markets, past trends are not predictors of future behaviors, but it’s hard to ignore the clockwork-like nature of bitcoin and its market movements.
Security Concerns
A common criticism of bitcoin in general is that its security budget (block rewards) drops by 50% every 4 years. So in order to keep a similar level of security, the price of BTC in dollar terms needs to at least double every 4 years to account for the reduction in nominal rewards.
This is a coherent argument for the most part, but it’s a speculation about the future that cannot be proven nor disproven at this point in time. Bitcoiners and miners have history on their side. However, a logical following of the argument does seem to suggest that if bitcoin fails to rise in USD terms after a halvening, then it could suffer a blow in terms of overall hashrate, or even a mass exodus of miners enough to put a dent in bitcoin’s infrastructure.
New All Time Highs for Bitcoin
With the pessimist arguments firmly made, we can move onto the optimists angle. After every halvening event, bitcoin has gone on to set new all time highs. It took 532 days after 2012, 525 days after 2016, and 322 days after the 2020 halvening.
This is not enough information to necessarily derive a trend or a prediction, other than, bitcoin is poised to break old all time highs post the 2024 halvening. Whether or not the market anticipates this and pushes bitcoin up pre-halvening is still up for discussion.
The bitcoin meme that circulates to encapsulate this market sentiment is “Is the halvening priced in?”
Macro Uncertainty
One aspect that could break the trend described above is all of the uncertainty in the macro environment. The war in Ukraine, the American banking crisis, the formation of BRICS, and the crypto regulation crackdown are all playing out simultaneously.
Now, it is just as easy to make the case that these events could add fuel to bitcoin’s fire, rather than put it out. For example, a de-dollarization event could put a lot of attention on bitcoin as an alternative preferred store of value.
Dedollarization would mean that many people globally are selling their USD. They have to sell it “for something” and some percentage of them would likely consider bitcoin as a viable option. Even if bitcoin captures a small percentage of people’s move out of the USD, it could be enough to propel bitcoin to new all time highs.
Keep in mind, these macro events will take years to play out and eventually, they will be happening alongside the halvening.
I like to think of these events as pressure building up in pipes. The pipes are able to keep the pressure contained for a long time, but every system has its breaking point. The question is, when the system breaks, how will it break, and what will the fallout from the economic explosions look like?
How the 2024 Halvening Plays Out
For me, the events that are playing out on the world stage are painting a very clear picture of how the 2024 halvening will play out. Banking institutions all around the world are facing a catastrophic loss in trust which is an existential risk for their continued operation.
Furthermore, after the mass printing of fiat currencies in 2020, economies are still feeling the knock-on effect of inflation years later. It’s hard to imagine a world wherein currencies continue to be devalued and central banks continue to be trusted despite their massive repeated betrayals of public trust.
The result of these events is a bull run. It won’t be fueled by ICOs like in 2017, or DEXs and NFTs in 2021. It’ll be fueled by a mass exodus out of the traditional banking system and into the cryptocurrency ecosystem. At the center of that ecosystem is digital gold, Bitcoin.
