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Pantera Capital, a crypto venture fund, has suggested that the price of Bitcoin could experience a substantial surge, reaching $148,000 after the upcoming halving event scheduled for next year.
They base this prediction on a key metric known as the stock-to-flow ratio. According to Pantera, this ratio could drive Bitcoin’s price up to $35,000 before the halving event and then further to $148,000 after it occurs.
The stock-to-flow ratio serves as a measure of the existing supply of Bitcoin in comparison to the new supply entering the market. A higher stock-to-flow ratio signals a scarcity of the asset, which has the potential to drive up its price. As of now, Bitcoin is trading at around $26,500.
Historically, Bitcoin halving events have been associated with significant increases in its price due to their impact on the stock-to-flow ratio. These halving events are pre-programmed occurrences that happen approximately every four years, cutting the number of new Bitcoins entering circulation in half.
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The 2024 halving is expected to reduce the per-block reward from 6.25 Bitcoins to 3.125 Bitcoins. Such substantial reductions in the rate of new supply entering the market lead to a higher stock-to-flow ratio, effectively increasing the scarcity of Bitcoin and potentially driving up its price.
Pantera Capital stated, “The 2020 halving reduced the supply of new bitcoins by 43% relative to the previous halving. It had a 23% as big an impact on price.”
He added, “The next halving is expected to occur on April 20, 2024. Since most bitcoins are now in circulation, each halving will be almost exactly half as big a reduction in new supply. If history were to repeat itself, the next halving would see bitcoin rising to $35k before the halving and $148k after.”
Pantera Capital believes that the upcoming Bitcoin halving, along with the recent XRP ruling and BlackRock’s Bitcoin ETF application, creates a promising setup for the next digital asset bull market.
The company stated, “Our view is that we’ve seen enough—there’s just so long markets can be down. We would then see a rally into early 2024 and then a strong rally after the actual halving.”
