On January 3, 2009, the bitcoin (BTC) blockchain live. It was created as an alternative payment system free from central control. Where bitcoin used to be virtually worthless, we have seen an extreme increase in the price over the years. For example, bitcoin reached a in November 2021 record high of $69,044. We are currently hovering around $23,000. A further increase in price will depend on a number of factors. For example, inflation, the ‘havling’ of bitcoin and institutional adoption play a role in further price developments.
Inflation
In a recent article we already discussed the current extreme inflation and what this means for bitcoin. Fiat currency are government-backed currencies such as the euro or dollar. Governments are completely in their power to print extra money. In the long run, this causes your purchasing power of the relevant currency to decrease.
Bitcoin is often labeled just like gold a hedge against inflation. Just like gold, the amount of bitcoin is limited. Our earth contains a limited amount of gold. The more gold is mined, the less gold is left in the ground. Similarly, we know about bitcoin that there is a maximum number, which is 21,000,000. The production of bitcoin is also fixed in mathematical formulas.
It is the law of supply and demand that bitcoin will rise in price as dollars and euros continue to be printed. At the moment there are already more than 19,000,000 bitcoin in circulation. This is not far from the total number of bitcoins that may be in circulation. In comparison, fiat currencies, such as the dollar, are massively overprinted.
The bitcoin halving
Via mining new bitcoins are created. Guarantee through math puzzles miners the security of the network and all transactions are monitored. In return, they get bitcoin. The amount of bitcoin that will become available when solving these mathematical puzzles has been fixed since 2009. Every four years, the amount of bitcoin that becomes available at mines halved. This is also called the halving named.
Historically, after the halving, we see a bullish period of time. For example, after the first halving in November 2021, the price rose from $12 to $1,200. The second halving took place in 2016. In the following two years, the price rose from $647 to $19,800. The last halving took place in May 2020. bitcoin then climbed from its low at $8,700 to $69,044.
The next halving will take place in 2024. Given the increases that bitcoin experienced after the previously mentioned halvings, the peak after the halving in 2024 estimated at $284,272. The Winklevoss twins, who are around the 1% of all bitcoins bought in 2012estimate that after the 2030 halving, bitcoin will be worth Can represent $500,000.
Institutional Adoption
The interest from large companies is driving large amounts of money into the crypto world and makes owning crypto accessible to the majority. For example, Michael Saylor, ex-CEO van MicroStrategyensured that MicroStrategy over 129,000 bitcoins has in possession. Bank Golman Sachs also announced in April that its private wealth management division would offer bitcoin as an investment opportunity.
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