The question of whether Bitcoin will reach $100,000 has become a hot topic among crypto enthusiasts and financial analysts alike. A number of things are fueling this speculation. Increased institutional investment, the positive effects of halving events, and strong metrics signaling Bitcoin is in short supply and/or undervalued all feed into this narrative. This post looks at a few other factors swirling around the scene. It presents a sober view on Bitcoin’s prospects of hitting this major milestone. At MetaBlock X, it’s our goal to provide you with the tools and industry know-how to successfully operate in these exciting, but challenging, new market dynamics.

Institutional Investment: A Driving Force

Retail trading aside, institutional investors have long been a constant source of legitimacy for Bitcoin as an asset class and their entry into the market has been monumental. Players such as MicroStrategy, BlackRock, ARK Invest, and Fidelity have been essential actors in creating the current Bitcoin scene we now see in 2024. Their investments bring a load of smart capital behind strong demand into a market eagerly pursuing new investment. They boost Bitcoin’s credibility as a store of value and a possible hedge against inflation.

Just like the growing proliferation of digital asset services offered by traditional finance (TradFi) organizations to retail and institutional clients alike. Notably this expansion has included the introduction of Bitcoin-related investment products, pulling Bitcoin deeper into the established financial system. Still, the accessibility and acceptance of Bitcoin by these institutions will be key for Bitcoin’s continued growth and long-term price appreciation.

Nowhere is this more evident than at Fidelity Investments, which has led the charge to make Bitcoin more accessible to institutional customers. Just a few weeks later, in January 2024, Fidelity brought the Fidelity Wise Origin Bitcoin Fund (FBTC) to market, as the first spot Bitcoin exchange-traded product (ETP). Then, in early July 2024, Fidelity launched Fidelity Physical Bitcoin ETP (FBTC) on the London Stock Exchange. Each of these moves opens up new ways for investors to gain exposure to Bitcoin increasing demand even more.

The Halving Effect: Supply and Demand Dynamics

It’s a pattern seen in the past — Bitcoin halvings, which happen roughly every four years, have had transformative impacts on Bitcoin’s price trajectory. Each halving event reduces the per block rewards for Bitcoin miners by half. By design, it decelerates how quickly new Bitcoins can be minted and brought into circulation. This contraction of supply, combined with constant or growing demand, tends to cause price appreciation.

Analyzing the Halving Impact

The impact of Bitcoin halvings can be seen through several key indicators:

  • Price Increase: Historically, Bitcoin halvings have resulted in a price increase in the months that followed. Significant increases were observed after the first and second halvings.
  • Reduced Supply: The halving event lowers the reward Bitcoin miners receive for validating transactions by 50%, slowing the rate at which new Bitcoins enter the market.
  • Increased Anticipation: In the months leading up to a Bitcoin halving, the crypto market often enters a period of heightened anticipation and speculation.
  • Revenue Recovery for Miners: After halving events, the price increase has led to a recovery of revenue for miners as the block rewards decreased.
  • Long-term Investor Growth: The percentage of Bitcoin held by long-term investors (more than 3 years) has shown consistent growth after each halving.

Undervaluation Metrics: Gauging Bitcoin's Potential

According to various metrics, Bitcoin is undersold at the moment leaving ample room for upside potential. These measures shed light on Bitcoin’s market valuation in comparison to its price history and the underlying activity on its network.

  • MVRV Z-Score: The MVRV Z-Score is used to assess when Bitcoin is overvalued or undervalued relative to its "fair value." The MVRV Z-Score, smoothed with a 180-day moving average, suggests that Bitcoin is in a growth phase and potentially undervalued.
  • SSR (Supply in Profit Ratio): The SSR increases as the BTC price rises, indicating reduced purchasing power, which may signal that BTC is overvalued at prevailing market prices. However, the converse is also true: a low SSR could indicate undervaluation.

These metrics, while not definitive predictors, offer valuable context for assessing Bitcoin's current market position and potential for future growth.

Potential Risks and Alternative Viewpoints

These four factors combined do lead to an optimistic outlook for Bitcoin. We need to be real about the opposing dangers and viewpoints that might stop it from reaching $100,000.

  • Volatility: Massive swings in price, with significant value wiped off the total value of cryptocurrencies.
  • Regulatory uncertainty: Unclear regulatory environment, with different countries and jurisdictions having different definitions and regulations for cryptocurrencies.
  • Loss of access to funds: The possibility of losing access to one's own money, for example, due to lost passwords or incorrect sending addresses, with an estimated one-fifth of all bitcoins being inaccessible.
  • Security risks: The risk of theft or loss by third-party services, which could result in losing one's entire investment.
  • Complexity and barrier to entry: The complexity of using and securing Bitcoin is considered a high barrier to entry by some experts.

Expert Opinions and Forecasts

Many reputable experts have shared their bullish case on Bitcoin’s future value.

  • Hal Finney's Prediction: In 2009, Hal Finney predicted that each Bitcoin could reach $10 million in value, based on a thoughtful analysis of Bitcoin's potential as a global payment system.
  • JPMorgan's Forecast: In December 2020, JPMorgan predicted that Bitcoin would likely impact gold's market position for years to come.
  • Fidelity's Price Modeling: In June 2022, Fidelity Digital Assets division released a price modeling document, suggesting a baseline CAGR of 40% for Bitcoin between 2022 and 2030.

Though these predictions vary widely from one to the next, they all point toward the possibility of Bitcoin experiencing explosive growth in value in the coming years.

There are several important reasons on the table for why Bitcoin would go to $100,000. Rising institutional investment, halving events, and metrics showing international undervaluation all lend credence to this potentially bullish prospect. At the same time, potential risks like regulatory uncertainty and market volatility should be taken into account. Like with any new asset class, doing your homework is key to making smart decisions in the world of crypto. At MetaBlock X, our mission is to provide you with clarity and confidence. This gives you the confidence needed to make the right strategic decisions in the world of digital assets.