In a matter of days, the Bitcoin (BTC) community will confront the eagerly anticipated halving event. This adjustment will slash the reward for mining a block from 6.25 to 3.125 BTC.
This will impact miners’ profitability and likely influence the crypto market’s prices.
10x Research Give $122,000 Target for Bull Market Peak
Markus Thielen of 10x Research has highlighted significant market changes post-halving. He notes that miners might flood the market with up to $5 billion worth of Bitcoin as they liquidate reserves to manage reduced rewards.
“The crypto market could face a significant challenge in a six-month ‘summer’ lull as Bitcoin miners prepare to sell off substantial portions of their BTC inventories. These inventories, painstakingly built over the past few months, could disrupt the market dynamics,” Thielen wrote.
Historically, Bitcoin often experiences a price increase leading up to a halving, only to enter a period of limited price movement afterward. Despite a 32% rise in value before past events, the market typically sees extended periods of sideways movement lasting several months.
Read more: Bitcoin Halving Countdown
Bitcoin’s Price Action Post 2020 Halving. Source: 10X ResearchFurthermore, Hannah Phung from SpotOnChain discusses the delayed effects of reduced supply on prices. She observes that substantial price increases usually occur 6 to 12 months after the halving.
For example, following the initial halving in November 2012, Bitcoin’s price climbed from approximately $12 to over $1,000 by the end of 2013. After the second halving in July 2016, Bitcoin’s price surged from around $650 to nearly $20,000 by December 2017. Similarly, the third halving in May 2020 saw the price jump from about $8,000 to a record high of $69,000 by November 2021.
Additionally, Bitcoin’s dominance has surged by 15% since the November 2022 bear market lows, overshadowing altcoins, which have not shown similar strength. This slow response in the altcoin market might indicate a longer wait for their expected rally post-halving.
Moreover, post-halving production costs will nearly double for many miners, adding financial pressure. For example, Marathon Digital reports its production cost per Bitcoin will increase from $23,000 to $46,000. Such heightened costs will likely increase the selling pressure as miners strive to remain financially viable.
Mining efficiency and reductions in hashprice also significantly influence market dynamics post-halving. The hashprice, or the average revenue miners earn per block, is set to decrease in line with the reduced block reward. This drop will further squeeze miners’ earnings, forcing them to sell their Bitcoin.
Read more: What Happened at the Last Bitcoin Halving? Predictions for 2024
However, after the short-term volatility, 10x Research gives a target of $122,000 for a bull market peak for Bitcoin.
“Bitcoin could trade roughly 2.5x above its production cost (~ $122,000 ) at the peak of this bull market (post-halving). This $122,000 post-halving level could be the North Star if the bull market continues; a higher Bitcoin price (for this cycle) seems extremely unlikely based on the historical analysis of the production-to-BTC cost ratio,” 10X Research explained.
