XT.COM Research: Will BTC hit $100,000 after the fourth halving?
With less than a day to go before the fourth Bitcoin halving in history, "halving" has undoubtedly become the core issue in the current market. According to Google Trends data, the search popularity of "Bitcoin halving" continues to hit new highs.
The most discussed and concerned issue in the crypto community is the market trend after this round of halving. XT.COM research believes that referring to past data and the current continuous net inflow of Bitcoin spot ETFs, the BTC price may reach a new high within a year after the halving, breaking through the $100,000 mark. In addition, the Bitcoin ecosystem will usher in a big explosion, and runes, inscriptions, and memes will become important narratives for the next bull market cycle.
XT.COM will continue to deepen its roots and focus on the Bitcoin ecosystem, launch various high-quality assets as soon as possible, and help crypto investors capture more alpha.
1. What are the similarities and differences between this round of Bitcoin halving and previous halvings?
The fourth halving of Bitcoin will take place when the block height reaches 840,000, which is expected to be on April 20, with less than a day left. This halving will reduce the Bitcoin block reward from 6.25 BTC to 3.125 BTC.
The similarities between this halving and previous ones are that they are all aimed at increasing the scarcity of Bitcoin. The halving event is a mechanism built into the Bitcoin protocol, which usually occurs every four years. It is designed to control the supply by reducing the rate at which new Bitcoins are generated, thereby maintaining the scarcity and value of Bitcoin. This mechanism is designed to simulate the mining process of precious metals such as gold. Over time, the difficulty and cost of mining will increase, resulting in a decrease in the new supply. In fact, no matter which halving occurs, its essence is the same, that is, to reduce the supply of Bitcoin in order to achieve the effect of price increase.
There are several obvious differences between this halving and the previous ones. First, the changes in the global macro environment have brought certain uncertainties to the price of Bitcoin.
Take the third Bitcoin halving as an example, which took place in May 2020. At that time, the world was affected by the epidemic, and the Federal Reserve took the lead in launching unlimited quantitative easing. Major central banks around the world, including the European Central Bank, the Bank of England, and the Bank of Japan, also launched or increased quantitative easing. Under the massive printing of money and flooding, the prices of global financial assets have increased significantly, and Bitcoin, as an emerging asset category, has also benefited from it. This is also the most important driving force for Bitcoin to rise to $69,000 in the last bull market.
In contrast, during the fourth Bitcoin halving, the Federal Reserve has continued to raise interest rates since 2022. Although it has currently suspended interest rate hikes, it has never announced a rate cut. In a high-interest financial environment, it is difficult for global financial assets to rise sharply, and it is also difficult for Bitcoin to survive independently. If the Federal Reserve cuts interest rates and takes additional stimulus measures to maintain economic growth in the coming months, such as September or December, it is likely to boost demand and prices for cryptocurrencies such as Bitcoin. Simply put, if the global macroeconomic situation is good and investor confidence is high, then the halving event may cause a stronger price reaction. Conversely, if the macroeconomic situation is poor and investors are cautious, then the halving event may not have a significant impact on prices.
The second difference is the changes in the crypto market environment, and the process of Bitcoin legalization is moving forward.
Compared with previous halvings, the market environment and investor sentiment of Bitcoin have changed significantly. In the earliest halvings, the market had insufficient understanding of it and there were many speculative behaviors. Today, Bitcoin has gradually been accepted by traditional financial institutions and large technology companies, and its market size and influence have made a qualitative leap. For example, in 2021, after the last halving, we saw US-listed companies such as Tesla, PayPal, and MicroStrateg include Bitcoin in their balance sheets. This year, the Bitcoin spot ETF was also passed in the United States, and traditional large financial asset management groups such as BlockRock and Fidelity, which manage trillions of dollars, began to hold Bitcoin, which was unimaginable in the past.
In addition, the global legalization of cryptocurrencies has been advancing over the past few years. Even the sovereign state of El Salvador has passed a Bitcoin bill, treating it as legal tender, and has begun to purchase a large amount of Bitcoin, which is unprecedented in the previous halving cycles. In Asia, Hong Kong, as an important gathering place for world finance, also legalized cryptocurrencies last year, sending a friendly signal to the Chinese market.
As governments and regulators around the world pay more attention to and intervene in the cryptocurrency market, the trend of Bitcoin compliance and regulation is increasing, the market is more mature and stable, and higher requirements are placed on participants. For example, exchanges, licensing has become a must.
Currently, XT.COM has compliance licenses from Dubai DMCC and the US MSB, and was awarded the "Best Cryptocurrency Platform" at the Dubai Cryptocurrency Expo in 2023. In response to the user's concern about the security of funds, XT.COM fully protects the user's assets from aspects such as safe operation, audit guarantee and cutting-edge technology.
2. After the fourth halving, will the price of Bitcoin reach $100,000?
To predict the future price trend of Bitcoin, we can analyze it from the following dimensions.
First, we can study the past price trends of Bitcoin, especially the market reaction after the previous halving events. Bitcoin has experienced three halvings in history, in November 2012, July 2016, and May 2020. The first three halvings were accompanied by significant price increases. Within a year after the first halving, the price of Bitcoin soared from about $12 to more than $1,000; after the second halving, the price of Bitcoin reached nearly $20,000 at the end of 2017; after the third halving, the price of Bitcoin soared from about $10,000 to more than $60,000 in less than a year.
Comparing the data from several times, we found that the price of Bitcoin usually starts to rise about a year before the halving event and reaches its peak about a year after the halving event. The fourth halving will occur in April 2024, and the next high point will occur in April-May 2025.
So, how much can Bitcoin rise in the next round? We can consider it from the perspective of supply and demand. From the supply perspective, before the fourth halving, the annual output of Bitcoin was about 330,000. Calculated at a price of $65,000, it would bring more than $20 billion in selling pressure to the market. After the halving, the annual selling pressure of Bitcoin will also be reduced by half, which is equivalent to a reduction of $10 billion, effectively alleviating the selling pressure of Bitcoin.
From the perspective of demand, the current spot Bitcoin ETF is the largest buying force for Bitcoin. According to SoSoValue data, the current net asset value of the Bitcoin spot ETF is US$51.08 billion, and the historical cumulative net inflow has reached US$12.27 billion. In other words, in just three months, the spot Bitcoin ETF has brought in US$12.2 billion in capital inflows to the market, an average of US$4 billion per month. In previous bull markets, BTC usually had multiple callbacks of more than 20%, but the number of callbacks in this round of bull market was not large, and the callback amplitude was not large, thanks to the continuous inflow of off-market funds.
In addition, referring to the trend of gold ETFs, after the launch of the first gold ETF, gold ushered in a nearly 10-year long bull market, with an increase of more than 400%. Compared with gold, BTC is safer to store, more convenient to trade, and faster to transfer, and has superior value storage characteristics. The current market value of gold is 14.5 trillion US dollars, and the market value of Bitcoin is only 1.3 trillion US dollars. Bitcoin still has 10 times the space to gold, and the launch of Bitcoin ETF is more popular than the gold ETF of that year, and the speed of capital inflow is far ahead.
If we consider the Stock-to-Flow (S2F) model, a supply-demand model that uses the stock and flow of Bitcoin to calculate the value of Bitcoin, the S2F model predicts that the price of Bitcoin will rise significantly after the halving event in 2024 and reach a level of about $100,000 in 2025.
Finally, back to the macro environment, if the Fed cuts interest rates in the future, or even adopts quantitative easing, which leads to the depreciation of fiat currencies, or a global recession occurs, investors may look for safe-haven assets. As a non-traditional asset class, Bitcoin may be favored due to its scarcity and anti-inflation characteristics, and its price may further increase.
Currently, XT has launched the "VIP Exclusive Financial Management", in which the BTC exclusive financial management yield range is 7%-18%, which is also the highest BTC financial management product in the industry.
3. What major changes may occur in the Bitcoin ecosystem after the halving?
Over the past year, the Bitcoin ecosystem has flourished, especially with the emergence of inscriptions and BRC 20 tokens, which have also brought more vitality to this ancient blockchain.
In detail, the inscription has experienced two waves of enthusiasm. The first wave started in April 2023, and the second wave started in October 2023. OKX and Binance launched the inscription trading market, driving more inscription assets to rise. XT.COM also launched multiple BRC 20 tokens including ORDI, SATS, and RATS at the first time, which won the recognition of players.
As a native innovation of the Bitcoin ecosystem, inscriptions have brought more users and developers to the Bitcoin community, and various new applications and gameplay are constantly emerging. When Bitcoin undergoes the next halving, the market's focus will return to the Bitcoin ecosystem again, and inscriptions will also usher in the third wave of enthusiasm.
In addition to inscriptions, the Runes (attached text) protocol will also usher in an explosion after the Bitcoin halving. Runes was proposed by Casey Rodarmor, the founder of Ordinals. As an improved and upgraded version of the BRC-20 protocol, it aims to provide a highly efficient, highly compatible, and highly scalable Bitcoin asset issuance and management framework. It is expected to be officially launched when Bitcoin is halved.
Inscriptions and runes compete openly, and the two have re-attracted the market's attention to the Bitcoin ecosystem. After all, Casey publicly declared on social platforms: "If the market value of the Rune ecosystem does not reach $1 billion within a month after its release, I will commit suicide." After the Bitcoin halving, a new wealth-making effect seems to be imminent. In the subsequent development of the Rune ecosystem, XT.COM will also launch related assets in a timely manner, so stay tuned.
In addition, Meme projects may usher in a big explosion after the halving, not limited to the Bitcoin ecosystem. As the price of Bitcoin soars after the halving, players will focus on more Meme projects that can bring alpha benefits, which has been verified in the past few months.
In the past round of Meme wave, XT.COM actively embraced the industry trend and launched dozens of Meme currencies including BOME, SLERF, IQ 50, DEGENBASE, etc. SMOLE was launched almost at the same time as Swap. The returns of some currencies exceeded 100 times after listing, which can be called "Alpha Discoverer". In the future, XT.COM will continue to find more high-quality projects for users and strive to increase user benefits.
