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Standard Chartered, one of the world’s leading banks, raised Its long-term bitcoin price forecast predicts that the value of the leading cryptocurrency could reach $120,000 by the end of 2024. This upward revision comes as the bank acknowledges the potential for miners to hold a substantial portion of the newly created bitcoin supply.
With the recent rally in the price of bitcoin, Standard Chartered sees an opportunity for miners to reduce their sales activity, which could have an impact on the cryptocurrency’s scarcity and future value.
The Role of Miners in the Bitcoin Value Proposition
Miners hold an important position within the crypto ecosystem, as they are responsible for building and maintaining the network. And Standard Chartered’s forecast of bitcoin reaching $120,000 by the end of 2024 is based on the assumption that miners can adapt their sales practices to cover operating expenses, especially the cost of electricity required for mining activities. .
Related Reading: Standard Chartered Estimates Bitcoin Could Hit $100,000 by the End of 2024
By reducing the portion of newly created bitcoins they sell, miners can balance their cash flow as well as reduce the total supply of bitcoins available in the market. This adjustment in selling behavior has the potential to affect the supply-demand dynamics of bitcoin and potentially contribute to an increase in its value.
The reasoning behind Standard Chartered’s prediction lies in the assumption that miners, who currently produce around 900 new BTC per day globally, will opt to keep a large portion of their newly created coins. By doing so, they can cover their operating costs more efficiently.
If this adjustment occurs and the proportion of BTC sold by miners decreases, it could result in a reduction in the net supply of bitcoin by approximately 250,000 BTC per year. Such a reduction in supply is likely to put pressure on the price of bitcoin as demand potentially exceeds the coins available in circulation.
Factors driving Standard Chartered’s optimism
Standard Chartered’s revised forecast is based on the expectation that increased profitability for miners per bitcoin mined will encourage them to retain a larger portion of their newly created supply.
The bank’s top FX analyst Geoff Kendrick suggests that as the bitcoin price approaches the $50,000 threshold, miners could reduce the proportion of BTC they sell from 100% to around 20-30%. This reduction in daily supply, from 900 BTC to a range of 180-270, would equate to a significant reduction in net BTC supply of approximately 250,000 BTC per year.
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 in order to maintain scarcity and reduce inflation.
Combining the upcoming halving with a possible decrease in miners selling, Standard Chartered expects a favorable environment for a sustained rise in the price of bitcoin over the long term.
Meanwhile, over the past day, bitcoin has traded notably below the $31,000 level, with a market capitalization of $30,441 at the time of writing. Nevertheless, the asset is showing an increase of 1% over the past 24-hours with a 24-hour trading volume of $10.6 billion.
Featured image from Unsplash, chart from TradingView
