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Bitcoin Price Prediction for 2024 – Forbes Advisor
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Since its creation in 2009, bitcoin, the world’s oldest cryptocurrency, has attracted attention from fans, investors, scammers and, more recently, regulators.
For many of its acolytes, bitcoin is not just a new form of currency, but an innovative technology that introduced the world to the concept of decentralized currencies and laid the foundation for an entirely new type of economy – the cryptocurrency market.
For others, it was a way to make a quick buck, and while some of these early investors managed to join the circle of bitcoin millionaires, many more lost hundreds or even thousands of dollars trying to predict its price movements.
Bitcoin Price History
Bitcoin has been the subject of many price predictions, some of them extreme.
Notably, Cathie Wood, CEO of Ark Invest, predicted that bitcoin could reach a staggering $1.48 million by 2030.
Obviously, the world’s oldest cryptocurrency has come a long way since its first recorded price of less than a penny. In March 2024, BTC set a new intraday trading all-time high by breaking the $69,000 level and even reaching $73,000 before falling in price.
Nicholas Sciberras, senior analyst at Collective Shift, points out that the idea that bitcoin could one day be worth a million dollars per unit “really shows how far we’ve come.”
However, while large highs are possible, so are catastrophic lows.
On May 9, less than two months after reaching new highs for the first time in over two years, BTC was trading below $63,000 once again.
How will Bitcoin perform in 2024?
Bitcoin’s performance in 2024 depends on a variety of potential catalysts.
Numerous factors such as institutional adoption, the most recent halving event, regulatory changes, and macroeconomic trends will influence the price of Bitcoin in 2024.
When it comes to predicting the future, there are two potential outcomes to consider: the bull case and the bear case.
The case of the bull
Sciberras points to the increased demand for block space on the Bitcoin network due to new “signups” as a positive development. Inscriptions are recent innovations in the Bitcoin blockchain, such as ordinals and BRC-20 tokens.
These subscriptions could end up supporting the adoption of bitcoin’s Lightning Network, which allows for faster transactions and could see bitcoin become more of a payment method rather than just a store of value.
“If bitcoin can continue to progress and be adopted on the payments front, it could increase its overall utility and become more like ‘money’ – helping it reach those lofty price targets,” adds Sciberras.
“We are seeing early signs of Lightning adoption. Total Lightning Network payments have grown 1,212% over the past two years. We are also seeing Lightning overcome distribution hurdles with increased support.”
Interest Rates and Bitcoin
US Federal Reserve Chairman Jerome Powell has indicated that the central bank may have reached the peak of its rate hike cycle, which Sciberras believes could be a catalyst for a bitcoin rally in 2024.
However, after three Federal Open Market Committee meetings so far in 2024, the Fed has not yet chosen to reduce the federal funds rate.
According to CME Group’s FedWatch tool, as of May 9, there is a 97% probability of no rate cut at the next Fed meeting on June 11-12.
At the same time, the CME Group predicts an 87% probability of an interest rate cut in September and a 100% probability of at least one rate cut before the end of the year.
Sciberras recommends that investors keep an eye on inflation from the core personal consumption expenditure price indexor core PCE, which is the Fed’s preferred measure of inflation. Powell left the door open for further rate hikes if core PCE starts rising again.
Bitcoin halving in 2024
A defining feature of bitcoin’s price history is the halving eventwhich happens approximately every four years and reduces the rate of creation of new currencies.
The most recent halving took place in April 19thwhen the reward for mining a block of bitcoin decreased from 6.25 BTC per block to 3.125 BTC per block.
“We saw the price of bitcoin increase significantly a year before the halving and a year after,” says Sciberras.
Many investors see the halving as one of the most significant factors affecting the price of bitcoin. However, Sciberras is cautious.
“The jury is still out on what the halving price is or how important the event is in the grand scheme of bitcoin’s price trajectory,” he says.
“There is a theory that the four-year halving event is not as significant as many think and that, instead, its alignment with external liquidity cycles is what makes it appear to be a trigger for upward movement. of prices.”
Institutional Adoption
On January 10, the SEC approved 11 new Spot bitcoin ETFs, including applications filed by financial giants BlackRock, WisdomTree and ARK. Spot bitcoin ETFs trade bitcoin at the current or spot price.
Prior to the SEC’s January decision, the only bitcoin ETFs approved for trading in the US negotiated bitcoin futures. Futures are complex derivative instruments based on the future price of an asset.
Sciberras says the approval of the spot bitcoin ETF could be a key factor influencing the price of bitcoin in 2024. According to Sciberas, these approvals would not only require physical purchases of bitcoin – which would drive up prices – but would also add a considerable air of legitimacy to cryptocurrency more broadly. .
This appears to be precisely what happened. The price of Bitcoin soared to new highs above $73,000 in the two months following the SEC announcement.
However, the excitement surrounding spot bitcoin ETFs quickly faded. In May, the price of BTC fell below $63,000.
The Bear Case
Every investment has potential downsides and Bitcoin is no exception.
Sciberras says that on the downside of the ledger, there are concerns about the long-term security of Bitcoin as the block reward will continue to decline.
Then there is the controversial debate over inscriptions on the bitcoin blockchain.
While Sciberras recognizes the potential of subscriptions in generating sustainable fees for the protocol in the long term, especially as more bitcoins circulate and miners’ dependence on fees increases, he also notes the divided opinions within the community regarding its impact on network functionality.
Notably, a respected original bitcoin developer, Luke Dashjr, labels submissions as “spam.” He argues that they congest the network, complicating the mining process and overall network support. This difference in perspective sets the stage for potential ideological conflict within the bitcoin community.
Environmental considerations
Environmental consequences are another concern.
“There are ongoing attacks on the environmental impacts of bitcoin, with the White House proposing a tax of up to 30% on bitcoin miners in the US,” says Sciberras.
If bitcoin continues to be criticized for its energy consumption, this could threaten its price.
“The worst-case scenario is that we see Europe try to reintroduce a ban on [proof of work]which was attempted in 2022 but was quickly shot down.”
Bitcoin uses a proof of work validation system. Proof of work – as opposed to proof of bet—is the most energy-intensive validation system that cryptocurrencies can use.
Political issues
A shift in sentiment against bitcoin and cryptocurrency by governments could also lower prices.
“The US is becoming incredibly hostile towards cryptocurrencies and bitcoin,” says Sciberras.
Furthermore, if bitcoin threatens countries’ monetary monopolies due to its widespread adoption, governments could act to restrict it.
Sciberras points to a bill introduced in the US to expand the Bank Secrecy Act and impose stricter reporting requirements for digital currency transactions, including those with unhosted wallets, as an area of concern.
“In its current form, this legislation would cripple the US crypto industry,” he says.
The implications of anti-money laundering, or AML, laws and Know Your Customer, or KYC, laws also worry investors. Sciberras highlights the specific challenges of imposing high reporting requirements on transfers to private and self-hosted wallets.
“Anti-money laundering laws continue to be a major battleground and can threaten the industry as compliance can be extremely difficult,” says Sciberras.
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Is Bitcoin a worthwhile investment?
Investing in bitcoin brings with it its share of risks and rewards, and understanding them is key to making an informed decision.
“Looking ahead to 2024 and beyond, I am personally very bullish on Bitcoin in the long term,” says Sciberras, citing the macroeconomic backdrop, the halving event in April, and the improved development of scalability within the Lightning network as well as the BTC spot ETFs.
However, the future of bitcoin is not without potential obstacles.
“If bitcoin continues to be targeted by governments and its energy consumption becomes even more politicized, then this could put pressure on bitcoin’s long-term sustainability,” says Sciberras.
One of the significant long-term concerns for bitcoin is its security in the face of a decreasing block reward.
“If there is little adoption and demand for bitcoin, or if fee revenue is inadequate to incentivize miners to upgrade their hardware and mine new bitcoins, security could decline and threaten the network,” he says.