The astronomical rise of Bitcoin (BTC) 0.02%) in 2021 was a sight to behold, with the original cryptocurrency reaching almost $70,000 higher than its all-time record in November 2021. Many believed that Bitcoin had enough momentum to reach the $100,000 mark. Unfortunately, the fall was as rapid as the rise and it has continued to decline since.
This fall of more than 70% is not unexpected in crypto winters and bear markets. However, past data indicates that rallies are possible when these periods come to an end. To understand if Bitcoin can hit $100,000 in 2023, we must consider what the future may hold and when that milestone could be achieved. Bitcoin has only three halving events in its history.
Halving is a process that takes place every four years or 210,000 additional blocks to the blockchain, where miners rewards are cut in half. So far there have been three halvings: November 2012, July 2016, and May 2020. Originally, the reward for miners was 50 Bitcoins, but it has been reduced to 6.25 and will drop to 3.125 in the future, in May 2024.
Halvings Paint a Clearer Picture
When plotting the dates for the previous halvings in a Bitcoin price chart, a few things become clear. Note that these are just averages and should not be taken as a way of timing the market. Data from the three halves in the past three years suggests that, on average, the bottom is reached when the next halving is approximately a year and a quarter away. With the next halving due in 18 months, it may indicate that we have already reached a bottom.
In the past, Bitcoin has slowly made modest returns from the bottom to the top. On average, when the next halving will occur, the price of Bitcoin reaches 60% lower than its previous all-time high. That would put the May 2024 Bitcoin price at around $40,000. Although not a terrible performance, it does signal that it won’t be reaching $100,000 any time soon.
I believe that if Bitcoin is ever going to reach the $100,000 mark, it won’t be until 2025. The same data we have been looking at suggests that an all-time record is usually reached in less than a year after the halving. As there is no clear pattern to indicate how high the prices will go after the halving, I would wager that it could go 30% higher than its previous record of almost $70,000 and surpass the six figures.
So if past trends are to be believed, bullish investors who want to experience the euphoria of 2021 again will have to wait until 2025 to reach a new all-time high. But this should not be seen as bad news. Rather, it could be seen as an opportunity. Prices are down by more than 70% and there is little risk of additional losses, so now may be a good time to increase your exposure and prepare for long-term appreciation. Remember, the patient and consistent investors are the ones who are rewarded.
RJ Fulton has positions in Bitcoin. The Motley Fool has positions and recommendations in Bitcoin. The Motley Fool has a disclosure policy.