In October 2024, the crypto world is once again buzzing with excitement as Bitcoin, the king of digital currencies, leads the charge into what many believe is the start of a new bull run.
After dipping as low as $49,000 earlier in the year, Bitcoin has recovered remarkably, climbing past the $65,000 mark as of October 2024, and that's a stunning 30% rally!
But how did this bull run come to be? And can this momentum be sustained? Let's take it one step at a time.
What Exactly Has Reignited this Bull Run?
Several factors are contributing to the surge in Bitcoin's price, and the evidence points to this being more than just a temporary spike.
Let me show you some of the factors I believe brought the bull run.
The Halving Cycle and Supply Shock
Historically, Bitcoin’s price tends to follow a four-year cycle, with bull runs often emerging months before and after the Bitcoin halving event. The most recent halving occurred in April 2024, cutting the block reward from 6.25 BTC to 3.125 BTC. This reduction in new Bitcoin entering the market decreases supply, creating a scarcity effect.
The mechanism behind halving? The Bitcoin network operates with a fixed cap of 21 million coins, and halvings play a pivotal role in controlling the rate of new Bitcoin entering circulation. Each halving reduces the inflation rate, tightening the supply while demand—especially in bullish periods—often remains steady or grows.
In the 2024 halving, Bitcoin's inflation rate dropped to approximately 1.1%, significantly lower than that of most fiat currencies. As a result, there was a supply shock, where fewer new Bitcoins are available for purchase.
In the past, whenever Bitcoin's supply has been cut in half, the market experienced a period of price appreciation. Following the 2020 halving, for example, Bitcoin soared to an all-time high of nearly $69,000 within a year.
The current halving is expected to have a similar impact, with analysts predicting that Bitcoin’s price could surpass $100,000 if the demand holds.
Post-Halving Market Phases
Bitcoin follows a pattern after its halvings. There is typically a phase of price consolidation—where the market digests the new supply conditions. This is followed by an accumulation phase, where savvy investors, including institutions, start to build positions before the next major rally.
We are currently witnessing a consolidation phase, with Bitcoin hovering around the $66,000 mark after initially dropping to $49,000 earlier in the year.
However, if the pattern holds, this accumulation could set the stage for significant price growth in late 2024 and into 2025.
Some experts suggest that we are still in the early stages of the post-halving rally, with potential for substantial gains over the next six to twelve months.
Macroeconomic Conditions
Global financial policies are playing a huge part in Bitcoin’s recent comeback. After months of raising interest rates to tackle inflation, the U.S. Federal Reserve made a big shift in September 2024, cutting rates by 50 basis points as inflation started to cool down. This marked the first rate cut in over four years, and it was a game-changer for risky assets like Bitcoin.
When interest rates drop, the returns on traditional safe investments, like government bonds, also tend to go down. As a result, investors start looking for better opportunities in riskier markets. Bitcoin, often dubbed "digital gold," is one of the big winners here, as people move their money into assets that not only offer protection against inflation but also have strong growth potential.
What’s more? The Federal Reserve’s move sparked a domino effect, with other central banks like the European Central Bank and the Bank of England following suit. This global shift toward more accommodating policies injected fresh liquidity into financial markets, prompting investors to channel their funds into high-growth areas—especially cryptocurrencies.
Inflation and the Search for a Hedge
While inflation rates have cooled from their peak levels in 2022-2023, many investors remain wary of future inflation risks due to ongoing geopolitical tensions, supply chain disruptions, and expansive fiscal policies in the wake of COVID-19.
As inflation erodes the purchasing power of fiat currencies, assets like Bitcoin, which have a fixed supply, become more attractive as hedges against inflation.
Bitcoin's appeal as a store of value has grown in this inflationary environment. Unlike fiat currencies, Bitcoin’s capped supply of 21 million coins ensures that it is immune to inflationary policies such as money printing. Investors concerned about the devaluation of traditional currencies have turned to Bitcoin as a way to preserve wealth.
Weakening U.S. Dollar
After years of relative strength, the U.S. dollar began to lose value against other major currencies in 2024 due to rising fiscal deficits, inflation, and changing interest rate differentials.
Historically, Bitcoin has benefitted from dollar weakness, as it is often viewed as an alternative store of value.
As the dollar depreciates, foreign investors find it cheaper to buy Bitcoin, increasing demand for the cryptocurrency. At the same time, domestic investors, worried about the dollar's purchasing power, seek refuge in Bitcoin as a stable, decentralized alternative.
Institutional Adoption
Institutional interest is another significant catalyst. The approval of Bitcoin spot ETFs earlier in the year, led by financial giants such as BlackRock, has brought a new level of legitimacy and liquidity to the market. Over $57 billion in capital has flowed into Bitcoin ETFs, further boosting demand.
Additionally, over 50% of major U.S. hedge funds now hold Bitcoin, signaling that institutional investors are viewing it as a credible asset. These developments have made Bitcoin an integral part of diversified portfolios, pushing its price higher.
Investor Sentiment and Whales Activities
In recent weeks, we have seen investor sentiment in the crypto market shift dramatically. The crypto Fear & Greed Index, a barometer of investor sentiment, recently registered a score of 73, indicating "greed," the highest level since Bitcoin reached its all-time high of $69,000 in 2021.
The activity of Bitcoin "whales"—large holders of the cryptocurrency—also signals strong market confidence. Data shows that whales accumulated over 100,000 BTC in the past six weeks, suggesting that they expect the bull run to continue.
Historically, whale accumulation during periods of market consolidation precedes major price rallies.
How High Can Bitcoin Go?
So, how high can Bitcoin realistically go during this bull run?
Analysts have different views, but many are pointing to $100,000 as a potential milestone in 2025. The VP of the Indian cryptocurrency exchange WazirX, Rajagopal Menon, has said that Bitcoin is planning a big breakout. The goal is to hit between $90,000 and $100,000 if all other factors hold.
Shorter-term predictions for Q4 2024 place Bitcoin’s price at between $70,000 and $80,000, depending on how quickly key resistance levels are broken.
Some even speculate that $150,000 is possible by mid-2025, citing increasing scarcity due to the halving and continued institutional demand.
Interestingly, some models suggest that Bitcoin could reach as high as $265,000 by the peak of the next cycle, driven by institutional inflows and the expanding crypto market cap.
Whatever results in the coming weeks would depend on sustained demand from institutional investors and the absence of any significant regulatory hurdles.
Can this Momentum Be Sustained?
We've seen all the bullish signals. However, there are certain risks looming on the horizon that could derail Bitcoin’s bull run.
Macroeconomic Uncertainty
The global macroeconomic environment remains highly uncertain. While rate cuts in the U.S. have supported Bitcoin’s rise, the Federal Reserve’s upcoming meetings in November could introduce new variables.
If inflation picks up again or if the U.S. economy underperforms, we could see a tightening of monetary policy, which could dampen Bitcoin’s momentum.
Additionally, the upcoming U.S. elections in November 2024 are expected to introduce significant volatility into financial markets, including crypto. Historically, political events of this magnitude have led to short-term price swings, and this could make it harder for Bitcoin to maintain its upward trajectory.
Regulatory Risks
The crypto market is no stranger to regulatory scrutiny, and 2024 is no different. While the approval of Bitcoin ETFs is a bullish sign, global regulatory bodies continue to tighten their grip on the market.
The U.S. Securities and Exchange Commission (SEC) is likely to introduce new regulations that could impact trading, particularly in decentralized finance (DeFi) and stablecoins, which could spill over into the broader crypto ecosystem.
Moreover, ongoing concerns about central bank digital currencies (CBDCs) could also pose challenges to Bitcoin’s dominance as governments around the world explore their own digital alternatives. If CBDCs gain traction, they could siphon off some of the demand for decentralized cryptocurrencies like Bitcoin.
The Bottom Line: Is a Six-Figure Bitcoin Within Reach?
As we head deeper into Q4 2024, the factors driving Bitcoin's bull run seem to be aligning perfectly. The halving supply shock, favorable macroeconomic conditions, institutional adoption, and strong investor sentiment are all creating a recipe for sustained growth.
However, while the excitement is palpable, caution is warranted. The crypto market is notoriously volatile, and factors like regulatory crackdowns, economic uncertainty, and political upheaval could hinder Bitcoin’s ascent.
As always with Bitcoin, the potential for massive gains comes with equally significant risks. If you're an investor who has been on the sidelines and you see this as the perfect opportunity to jump in, I think you should do so with your eyes wide open.
If the stars align, 2024 could be the year that Bitcoin finally achieves the elusive six-figure price target that many have long awaited. But if market conditions shift, the bull run could stall just as quickly as it began.