Despite a recent pullback, investors should feel confident that the price of Bitcoin (BTC-USD) will continue scaling new heights in the lead-up to the halving event in late April.
The price of BTC-USD has dropped to $67,000 days after it hit an all-time high of $73,835.57 on March 14. While some analysts are worrying aloud that a bubble is bursting in the crypto sector, the reality is that we’re likely seeing some profit-taking and consolidation after hitting a record high. In the coming weeks, BTC-USD can be expected to continue rallying into the halving event.
The Big Event
The halving event that’s expected sometime after April 15 is forecast to be a major catalyst for the price of Bitcoin. The halving event is when the underlying blockchain technology of Bitcoin is altered to reduce the rate at which new digital tokens are created by 50%. The halving event will restrict the supply of Bitcoin going into circulation at a time when demand for the cryptocurrency is sky-high, pushing the price upwards as a result.
Bitcoin was designed to cap the total supply ever to exist at 21 million tokens. To date, 19 million Bitcoin have been mined and released into circulation. A halving event occurs once every four years in order to slow the rate at which new Bitcoin comes into circulation, as well as cut the rewards given to cryptocurrency miners by 50%. The price of BTC has risen sharply after previous halving events. Since the last halving event in 2020, BTC-USD’s price has increased nearly 600%.
Rising Bets
The halving event isn’t the only catalyst for Bitcoin. The new spot BTC exchange-traded funds (ETFs) that were launched in late January have proven to be wildly popular with investors and exceeded the most optimistic expectations. Two months since their launch and the dozen spot Bitcoin ETFs have attracted more than $10 billion in capital, with BlackRock’s (NYSE:BLK) iShares Bitcoin ETF (NASDAQ:IBIT) the most successful.
The rapid growth of the spot Bitcoin ETFs and upcoming halving event have led many analysts to raise their price targets and expectations for BTC. Wall Street firm Bernstein Research has lifted its price target on BTC-USD to $150,000 and expects the crypto to continue reaching record highs. Analysts at JMP Securities are forecasting that spot Bitcoin ETFs could attract $220 billion of investor capital within three years.
At the same time, a growing number of options traders are betting that Bitcoin’s price will reach $200,000 by year’s end. It’s the first time in three years that options traders have taken out bets on Bitcoin’s price reaching the $200,000 level.
Buy Bitcoin
Sentiment towards Bitcoin is at its most positive since late 2021, when the market last peaked. After a prolonged crypto winter throughout 2022, the price of BTC is back at all-time highs. The new spot Bitcoin ETFs are still in the early innings of what looks to be a sustained run, and the upcoming halving event should push the price of the cryptocurrency even higher in the coming months. Given all the momentum behind it, Bitcoin is a buy.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
