Standard Chartered, one of the world’s leading banks, has it Starch Bitcoin’s long-term price forecast, as the major cryptocurrency is expected to reach $120,000 by the end of 2024. This upward revision comes as the bank acknowledges that miners could hold a larger share of the newly minted Bitcoin supply.
With the recent rally in the price of bitcoin, Standard Chartered sees an opportunity for miners to reduce selling activity, which could have implications for the scarcity and future value of the cryptocurrency.
Role of miners in bitcoin value proposition
Miners occupy a prominent position in the cryptocurrency ecosystem, as they are responsible for creating and maintaining the network. Standard Chartered’s prediction that bitcoin will reach $120,000 by the end of 2024 is rooted in the idea that miners may adapt their selling practices to cover operating expenses, particularly the electricity costs required for mining activities.
Related Reading: Standard Chartered Expects Bitcoin to Hit $100,000 by the End of 2024
By reducing the portion of the newly created bitcoins that they sell, miners can balance their cash inflows while simultaneously reducing the total supply of bitcoins available in the market. This modification in selling behavior has the potential to affect the supply and demand dynamics of Bitcoin and potentially contribute to an increase in its value.
The rationale behind Standard Chartered’s prediction lies in the assumption that miners, who currently produce approximately 900 new bitcoins per day on a global scale, will choose to hold a larger portion of their newly minted coins. By doing so, they can cover their operating costs more efficiently.
If this adjustment occurs and the percentage of BTC sold by miners decreases, it could lead to a decrease in the net Bitcoin supply by approximately 250,000 BTC per year. Such a decrease in supply has the potential to put upward pressure on the value of Bitcoin as demand potentially outstrips the coins available in circulation.
The drivers of Standard Chartered’s optimism
Standard Chartered’s revised forecast is based on the expectation that increased profitability for miners for each bitcoin mined will encourage them to hold on to a larger portion of the new supply.
Geoff Kendrick, a senior cryptocurrency analyst at the bank, suggests that as the Bitcoin price approaches the $50,000 threshold, miners may reduce the percentage of BTC they sell from 100% to around 20-30%. This decrease in the daily supply, from 900 BTC to the range of 180-270, would equate to a significant decrease in the net BTC supply of about 250,000 BTC annually.
Furthermore, Kendrick points to an upcoming event that will halve the number of BTC that can be mined each day, an intrinsic feature of Bitcoin’s design. This mechanism, known as “halving,” gradually limits the supply of new BTC to maintain scarcity and mitigate inflation.
By combining the potential reduction in miner selling with the upcoming halving, Standard Chartered expects an environment conducive to a sustainable increase in the Bitcoin price in the long term.
Meanwhile, over the past day, Bitcoin has been trading below the $31,000 level in particular, and the market price is at $30,441 at the time of writing. However, the asset is seeing gains of 1% in the past 24 hours with a 24-hour trading volume of $10.6 billion.
Featured image from Unsplash, chart from TradingView