6 Reasons Bitcoin Will Hit $200k After the Halving

As Bitcoin approaches its fourth halving in April, anticipation mounts regarding its trajectory post-event. With predictions ranging from $3.8 million per Bitcoin (Cathie Woods of Ark Investment) to being worthless (Jamie Dimon of JP Morgan), the whole community is engaged in the event.

With the halving set to reduce Bitcoin’s mining rewards to 3.125 BTC per block, a critical shift is occurring in its economic landscape further flattening its supply curve and accelerating the transition from an inflationary to a deflationary asset. As time goes by and the scarcity of each Bitcoin increases, natural economic forces will act to push prices upwards in response to increasing demand.

Amidst a macroeconomic cultural shift, traditional investments like real estate, once favoured by baby boomers, are losing appeal among millennials and Gen Zers. Instead, the new generations are increasingly turning to cryptocurrencies as an alternative investment. They are drawn by the perceived advantages of greater flexibility, lower barriers to entry and potentially higher returns.

In the following sections, we dive deep into the pivotal factors we think will fuel Bitcoin’s meteoric rise post halving.

Reason 1: Increased Confidence

From a code perspective, the protocol adjustment that will occur on block 840,000 is a relatively minor event. In prior halvings, scepticism towards the technology and its reliability were constantly questioned. Each halving event is psychologically associated with a proven track record that yet again, Bitcoin will execute against its intended purpose promised in the original whitepaper back in 2008. As an asset class, Bitcoin is still in its infancy and halvings bring a boost of confidence to outside observers and those not yet invested.

Reason 2: Slowing Inflation Drives Value

The first lesson in Economics is one of supply and demand. With a reduced supply and a constant or increasing demand, prices will rise in all markets. Bitcoin is no different in this respect. Its supply is designed to reduce over time and with Bitcoin’s constantly being lost (this is the nature of all currencies), the only direction for the price to head is upwards.

Reason 3: Hype and Network Effects

Source: Bitnodes Global Bitcoin Nodes Map

Halving events draw substantial media attention with the community actively driving discussions across various platforms. The heightened visibility contributes to a surge in market speculation, fueled by increased liquidity. Consequently, the combination of widespread awareness and heightened trading activity propels Bitcoin's price upward.

Source: DefiDive Realtime Bitcoin News Page

The Oxford English dictionary defines a network effect as “a phenomenon whereby a product or service gains additional value as more people use it”. Everyday examples of network effects are found on messaging platforms such as WhatsApp or Telegram, social media platforms such as Instagram or TikTok and online marketplaces such as Airbnb or eBay. It's not hard to see that in these examples, the greater the user base, the better the experience as a positive feedback loop ensures that an increasing user base encourages and attracts more participants.

With Bitcoin, as its ecosystem matures, its utility and value proposition increases with each independent actor whether private holder, institutional investor or state actors begin to increase their own holdings in the cryptocurrency.

Reason 4: Easier Access

Demand for Bitcoin has never been higher… and access to Bitcoin through exchanges, wallet service providers and now regulated financial instruments such as the Bitcoin ETFs has never been easier. With institutional capital now able to access Bitcoin through their brokers, more companies will have the ability to park cash assets into crypto assets providing further shareholder value as we have seen with Michael Saylor’s Microstrategy and Elon Musk’s Tesla, both choosing to park profits aside in the cryptocurrency.

Reason 5: A Hedge Against Economic Uncertainty

Increasing government debt over time has led to a landscape of economic instability characterized by cyclical periods of boom and busts occurring every 8-10 years. Amidst the macroeconomic uncertainty, currency devaluations are deemed an important tool establishing a gloomy backdrop. In this environment, Bitcoin is emerging as a prime hedge against uncertainty, offering an attractive alternative against the concerns of the current financial system.

Reason 6: Historical Price (1 year comparisons)

Let’s look at the history of Bitcoin’s price during the halving:

First halving happened on

November 28, 2012 – BTC $12.54

Price on November 28, 2013 – BTC $1,050

Percentage increase – 8,650%

Source: TradingView

Second halving happened on

July 9, 2016 – $640.69

Price on July 9, 2017 – $2,565

Percentage increase – 301%

Source: TradingView

Third halving happened on

11th May 2020 – $8,805.39

Price on 11th May 2021 – $56,413.95

Percentage increase – 540%

Source: TradingView

This historical growth suggests that Bitcoin has the potential for significant post-halving growth, further fuelling expectations of a $200k price tag.

Conclusion

While historical trends cannot predict future performance, Bitcoin’s past shows us remarkable price surges following halving events. At DefiDive our team have traded Bitcoin since 2011 and strongly hold a belief that this time will be no different, in a past blog post we set a target price of $92,000 per Bitcoin, this year we adjust our target to a 2024 top of $200,000 per Bitcoin. The price charts show Bitcoin’s gains in the past have been influenced heavily by huge demand which in 2024 is much more significant than ever before. This moment will signify the first halving since Bitcoin became a regulated asset class. Instead of us Bitcoiners having to constantly answer why we hold Bitcoin. We’re now finally entering an era of, why don’t you hold Bitcoin?

What is your 1 year price target and why?