Bitcoin Price Unlikely to Hit All-Time High Before the Halving — Here's Why

Bitcoin price might fail to top $70,000 before the April 2024 supply halving, but the longer-term projection looks positive.


Bitcoin price unlikely to reach $70,000

Investors may be tempted to turn bullish on Bitcoin, considering its 91% rally to $52,000 in just four months. With a current valuation of $1 trillion, Bitcoin is among the top 10 tradable assets in the world, surpassing Warren Buffet's Berkshire Hathaway.

However, for Bitcoin to reach $70,000, it would require an additional 34.5% increase in its market capitalization, equivalent to a $350 billion increase. This would place it ahead of silver and the UK pound. The question is whether the current conditions are supportive of Bitcoin's $1.35 trillion valuation.

Factors that fueled Bitcoin's all-time high

Bitcoin reached its all-time high of $69,000 in November 2021 due to low interest rates and skyrocketing inflation. At the time, traditional finance fixed-income yields were below 0.50%, prompting investors to seek risk-on assets. Additionally, US inflation rose to 6.8% year-over-year, the highest since June 1982. These conditions favored scarce assets and led to Bitcoin's surge.

However, the latest CPI inflation data for January 2024 shows a 3.1% increase year-over-year, which is moderately contained. Compared to 2021, investors now expect a 10.9% earnings growth for S&P 500 companies, reducing the incentive to seek alternative assets.

The impact of spot ETFs on Bitcoin

Since the launch of spot Bitcoin ETFs in the US, there has been a significant institutional inflow of $4 billion, amounting to 3.5% of Bitcoin's market capitalization. This indicates that the asset class has matured since November 2021 when Bitcoin reached its all-time high.

While the institutional inflow is a positive development, Bitcoin's price still remains 25% below its all-time high. Despite increased adoption, the bullish estimates of a $100,000 or higher price have not materialized. It is possible for Bitcoin to surge above $70,000 as long as the dollar continues to deteriorate, but it is unlikely to happen before the halving in April.