How high can bitcoin’s price go?

The price of bitcoin rose dramatically in the closing quarter of 2023, fueling hopes of a new bull market for crypto assets. But how high can bitcoin realistically go and what are the predictions for 2024 and beyond?

The stars seem to be aligned, with bitcoin set to halve in April 2024 and exchange-traded funds (ETFs) on the horizon. Crypto is once again catching the eye of big and small investors.

It all adds up to see the price of bitcoin rise from $16,200 on January 1, 2023, to over $44,000 in December.

Of course, no one can tell you for sure what the price will be next week, let alone at the peak of the next bull market, but that doesn’t stop people from making an educated guess.

In this article we cover:

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What could send bitcoin higher in 2024?

Bitcoin has always had its loyal supporters who only watch it rise in price over long time frames.

These people were few in number during the early years after its launch in 2009. There are now many millions of people who have faith in the asset, including prominent City of London and Wall Street firms.

From the optimist’s perspective, 2024 is shaping up to be an excellent year for bitcoin and some other crypto-assets. Multiple factors seem to coincide.

The ‘halving’

First, there is the bitcoin halving, which is due in April. Once every four years, the amount of new bitcoin created to pay the miners who run the network is cut in half, known as the ‘block reward’.

Currently at 6.25 bitcoin per block, it will be cut to 3.125. This limits the supply of new coins that can be sold. On each previous occasion, a halving has preceded a sharp run-up in price with the hit to supply, complemented by a surge in demand.

Next, there is the increasing interest from large institutions, illustrated by the multiple filings seeking a green light from regulators to launch bitcoin ETFs. This will allow people to effectively trade cryptocurrencies on stock markets just as easily as more traditional assets – allowing people to quickly buy and sell and hold them in existing portfolios.

Some of the biggest names in global finance see now as the time to offer a bitcoin-backed product to their millions of customers. This includes, among others, the world’s largest investment firm BlackRock as well as Franklin Templeton, Fidelity, VanEck and Cathie Wood’s ARK Invest.

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Third, it is likely that interest rates will be lowered. With inflation close to target in the US and falling rapidly in other parts of the world, central banks are expected to cut rates. Lower rates usually increase demand for assets such as stocks and crypto.

Why are major investors more interested in bitcoin?

As Jan van Eck, CEO of VanEck, recently put it, big players are being convinced by the ‘digital gold’ narrative. That is, they see bitcoin as something that can be globally recognized as having an enduring value and the scarcity needed to support it over time.

The global gold market is worth around £10.75 trillion, while bitcoin is only worth £0.63 trillion. If this narrative carries any weight at all, bitcoin can be seen as having considerable headroom to grow.

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Gold has a limited real world use, with jewelry being the most important one, but that hasn’t stopped it from reaching this high valuation due to the perception of scarcity and a social consensus that it has value.

The parallel with gold is as powerful as it is easy to understand and allows for relevant historical comparisons. Institutions have included gold in portfolios for many decades.

Read more: Should you invest in gold?

Another factor is simply that the price has risen a lot over multi-year time frames and many people have made a lot of money in bitcoin. Institutions completely dismissed bitcoin in its early years, but over time, more and more large investors have accepted that it is here to stay and that demand will increase much more than decrease over time.

Why would bitcoin ETFs help the price rise?

It seems highly likely that the launch of a bitcoin ETF will cause prices for the underlying crypto-assets to rise. Nothing is ever guaranteed with any price prediction, least of all in something as volatile as crypto. But it’s hard to see how widespread availability of ETFs won’t increase demand and therefore prices.

This is because the ETFs proposed by BlackRock and others must be directly backed by bitcoin in a one-to-one ratio, and can only be purchased from existing holders. No investment firm can create new bitcoin without mining it themselves – something they are not set up to do.

The other side of the ETF coin is that it opens up crypto investing to a huge new potential market. Namely, investors who can’t or don’t want to handle buying and holding crypto directly themselves.

Institutional interest

There are two main reasons why someone might be interested in owning crypto but not be able to buy and hold it directly.

First, the necessary technical knowledge. Taking care of your own crypto requires an understanding of how to safely use an online exchange, and then withdraw the asset to your own digital wallet to store it safely.

The second, which applies to institutions rather than individuals, is that they are simply not allowed to hold crypto directly, or any unregulated investments. They can of course hold ETFs in most cases.

Read more: What are ETFs and are they a good investment?

There is also a relevant historical precedent to consider. The introduction of gold ETFs in 2004 preceded a prolonged and dramatic rally in price. An ounce of gold hovered around the £200 mark for a couple of years before ETFs were launched, then went on a strong, fairly consistent climb from there to the current £1,600 area.

How high can bitcoin’s price go?

Although there are still staunch skeptics who think that bitcoin’s price has already peaked, or even those who say it will eventually ‘go to zero’, but they are getting fewer in number every year.

This is because, although there have been many crashes in the past, so far it has always recovered, and then exceeded its previous peaks.

If that pattern holds true again, we can make some good predictions on the next spike.

In 2021, bitcoin reached a high of $69,000. That was just over three times its peak of around $20,000 in 2017 at the top of the previous bull market. Doubling from the 2021 peak would mean a price in the neighborhood of $200,000 per bitcoin before the next slump. Of course, there is no certainty that this will be repeated, but it is a benchmark worth knowing.

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Most forecasts point to prices well above the current level of around $40,000.

The investment bank Standard Chartered has predicted that the bitcoin price will reach the $100,000 mark by the end of 2024.

Ark’s Cathie Wood went on record with a long-term ‘base case’ forecast of around $650,000 and a potential ‘bullish scenario’ peak price of $1,500,000 at some point in the future.

Other notable predictions include crypto-focused hedge fund Pantera Capital’s very specific prediction of a $148,000 peak, while German bank Berenberg made a relatively limited prediction of $56,630 by the time of the halving in April 2024.

Can bitcoin’s price ever go to zero?

It is theoretically possible. However, it is highly debatable whether there is any realistic likelihood of this. Bitcoin has been around for almost 15 years now and has survived several dramatic crashes before making new highs.

It can be reasonably argued the ‘go to zero’ scenario would have already happened if it did.

It would seem that some form of ‘black swan’ event that fundamentally shifts the picture would be needed to make this happen quickly. One guess is as good as another in terms of what could cause such an event.

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Bitcoin black swan events

An example of a black swan event would be a complete breakdown of the underlying technology as a result of incredibly powerful quantum computers cracking the encryption algorithm. Or the internet itself goes completely offline. Such events remain in the realm of science fiction.

The bitcoin miners all stopping at once for some reason would be another way to ‘kill’ bitcoin, but this is incredibly far-fetched and would be nearly impossible for any government or other entity to bring about .

This is due to the decentralized nature of the network. As miners stop mining, the ‘difficulty’ of mining decreases, so less computing power is needed. Ending bitcoin would require all miners around the world to simultaneously stop maintaining the blockchain. If only a handful of people with computers and access to the internet wanted to continue, bitcoin would survive.

However, over a longer time frame, it is easier to see declines becoming embedded. Many coins have fallen in and out of favor over the years. The recent experience of some NFT owners has shown that once traders decide to stop investing, things do not go well for prices.

Of course, this does not happen quickly, and will require people to decide that they would rather put their money elsewhere or use another currency over a longer period of time. This leaves people plenty of time to reallocate their assets.

So far, however, bitcoin has faced all entrants to retain its title as the largest cryptocurrency. It doesn’t look like that will change anytime soon.

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