Standard Chartered, one of the world's leading banks, has raised its long-term Bitcoin price forecast, predicting that the flagship cryptocurrency could be worth $120,000 by the end of 2024. The increase comes as the bank acknowledges the potential for miners to hold a larger share of the newly minted Bitcoin supply.
With the recent surge in Bitcoin prices, Standard Chartered believes there is an opportunity for miners to reduce sales activity, which could have an impact on the scarcity and future value of the cryptocurrency.
The role of miners in Bitcoin’s value proposition
Miners hold an important position in the crypto ecosystem as they are responsible for the creation and maintenance of the network. Standard Chartered Bank's forecast that Bitcoin will hit $120,000 by the end of 2024 is rooted in the possibility that miners will adjust their sales practices to cover operating expenses, particularly the cost of electricity required for mining activities.
By selling less of the newly generated Bitcoin, miners can balance cash inflows while reducing the total supply of Bitcoin available on the market. This adjustment in sales behavior has the potential to affect Bitcoin’s supply and demand dynamics and potentially cause its value to surge.
The rationale behind Standard Chartered’s prediction is that miners, who currently produce around 900 new BTC per day globally, will choose to hold the majority of newly minted Bitcoin. By doing so, they can cover operating costs more efficiently.
If this adjustment occurs and miners sell less BTC, it could cause the net supply of Bitcoin to decrease by approximately 250,000 BTC per year. A reduction in supply could put upward pressure on Bitcoin's value as demand may exceed the coins available in circulation.
Factors driving optimism for Standard Chartered Bank
Standard Chartered’s revised forecast is based on the expectation that miners’ increased profitability per Bitcoin mined will encourage them to hold a larger portion of the newly mined supply.
Geoff Kendrick, the bank’s top foreign exchange analyst, said that as Bitcoin approaches the $50,000 threshold, miners may reduce the proportion of BTC they sell from 100% to about 20-30%. The daily supply is reduced from 900 BTC to 180-270 BTC, which equates to a significant reduction in the annual net BTC supply of approximately 250,000 BTC.
Furthermore, Kendrick pointed to the upcoming event that will halve the number of Bitcoins that can be mined each day, which is inherent in Bitcoin’s design. This mechanism, known as "halving," gradually limits the supply of new Bitcoins 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 continued Bitcoin price gains in the long term.
Meanwhile, Bitcoin has been trading notably below $31,000 over the past day, with the market price at the time of writing sitting at $30,441. Nonetheless, the asset is up 1% in the past 24 hours, with 24-hour trading volume of $10.6 billion.