Following a challenging 2022 for the crypto market, Bitcoin (BTC) has been rallying this year, and analysts believe the rally will continue in the coming years.
A Positive Year for Crypto
In a recent report, analysts at CryptoQuant predicted that 2024 will be a positive year for crypto, with the price of BTC reaching $54,000 in the mid-term and as high as $160,000 this cycle.
“On-chain valuation and network metrics signal bitcoin remains well inside a bull market and may be targeting $54,000 in the medium term and $160,000 as this cycle price top,” they said.
On-chain valuations are metrics that measure the value of BTC based on its blockchain activity, such as the number of transactions and the amount of coins held in wallets. On the other hand, network indicators measure the activities of the Bitcoin network, such as the number of active miners and the hash rate. Both metrics suggest whether Bitcoin is in a period of growth or decline.
The Catalysts
In their report, the analysts highlighted several factors that could lead to the upcoming rally in Bitcoin’s price next year. These factors, according to them, include the market valuation cycle, network activity, the forthcoming halving event, macroeconomic perspective, Bitcoin spot exchange-traded fund (ETF) approval, and growing stablecoin liquidity.
Bitcoin halving, which involves the reduction of reward for mining new BTC blocks by 50%, has historically been associated with the increase in the digital asset price.
By cutting the mining reward in half, the rate at which new BTC enters circulation reduces, thus creating scarcity and potentially driving up the asset’s price – if demand remains constant or increases.
History shows that BTC experienced significant price increases six to twelve months after each previous halving event. Halving happens every four years, with the next event scheduled for April 2024.
On the other hand, approving a spot Bitcoin ETF opens the door for mainstream investors to invest in the digital asset easily. This will likely bring in fresh capital and increased demand for Bitcoin. More than a dozen companies, including BlackRock, Grayscale, Valkyrie, and WisdomTree, have filed to launch spot bitcoin ETFs this year.
However, while analysts at CryptoQuant predicted a positive year for Bitcoin, they warned that the digital asset’s price could decline in the short term as recent investors sit on significant unrealized gains.
“There are some risks of a price correction given that short-term bitcoin holders are experiencing high unrealized profit margins, which historically have preceded price corrections,” they said.
At the time of writing this line, BTC trades at $43,632, representing a 1.80% increase on the day. The flagship cryptocurrency has increased by more than 159% since the beginning of this year.
