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The price of bitcoin has climbed rapidly in the early stages of 2024 to hit a new record high above $69,000. How high can bitcoin realistically go, and what are the predictions for the rest of this year and beyond?
Be mindful, past performance is not an indicator of future performance.
With the bitcoin halving due to arrive this April and crypto exchange-traded funds (ETFs now available, many are wondering how this will affect bitcoin’s price.
Nobody can tell you with certainty what the price will be next week, let alone at the peak of the bull market, but that does not stop people having an educated guess.
In this article, we cover:
- What could potentially send bitcoin higher in 2024?
- Why could bitcoin ETFs help the price rise?
- How high do some experts think the price could go?
- Could the bitcoin price ever ‘go to zero’?
Read more: Is bitcoin going to crash again?
What could send bitcoin higher in 2024?
First there is the bitcoin halving, 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 restricts the supply of new coins that could be sold. On each previous occasion, a halving has preceded a steep run-up in price with the squeeze on supply complemented by a rise in demand.
Next there is the rising interest from big institutions, exemplified by the multiple launches of bitcoin ETFs. These let people effectively trade cryptocurrency on stock markets as easily as more traditional assets – letting people buy and sell quickly as well as 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 clients. These include the world’s biggest investment firm BlackRock as well as Franklin Templeton, Fidelity, VanEck and Cathie Wood’s ARK Invest, among others.
Read more:When will interest rates go down and how could your investments be affected?
Thirdly, it is likely interest rates will be brought down. With inflation close to target in the US and falling fast in other parts of the world, central banks are expected to cut rates. Lower rates typically raise demand for assets such as stocks and crypto.
Why could bitcoin ETFs help the price rise?
It seems highly probable that launching a bitcoin ETF will see prices for the underlying crypto assets rise. Nothing is ever guaranteed with any price forecast, least of all in something as volatile as crypto. A widespread availability of ETFs could potentially raise demand and therefore prices.
This is because the ETFs being proposed by BlackRock and others must be directly backed by bitcoin in a one-to-one ratio, and this can only be bought from existing holders. No investment firm can create new bitcoin without mining them themselves – something they’re not set up to do.
The other side of the ETF coin is that it opens-up crypto investing to a vast new potential market. Namely, investors who cannot or do not wish to deal with directly buying and holding crypto themselves.
It is worth noting that Bitcoin ETF’s have not been given regulatory approval in the UK.
Institutional interest
There are two main reasons somebody may be interested in owning crypto, but not be able to buy and hold it directly.
Firstly, the technical knowledge needed. To look after one’s own crypto requires an understanding of how to use an online exchange safely, and then withdraw one’s asset to your own digital wallet to store it securely.
The second, which applies to institutions rather than individuals, is that they simply are 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 could they be a good investment to consider?
How high could bitcoin’s price potentially go?
There are sceptics who think bitcoin’s price has already seen its peak, or even those who say it will ‘go to zero’ in due course.
That’s because while there have been crashes aplenty in the past, so far bitcon has always recovered, then gone on to exceed its previous peaks, though past performance is not an indicator of future performance.
Read more:Is now a good time to consider buying UK shares?
Could bitcoin’s price potentially go to zero?
It is theoretically possible. Bitcoin has been around for close to 15 years now, and although it has survived several dramatic crashes before making new highs, its extreme volatile nature puts investors at risk of losing all their money.
Read more:How to consider investing to try to beat inflation
Cryptocurrency in not regulated in the UK. The UK regulator, the Financial Conduct Authority, has repeatedly warned investors that they risk losing all their money if they buy cryptocurrency, with no possibility of compensation.
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