International banking group, Standard Chartered, bumps up Bitcoin’s forecast for 2024, projecting a significant surge in the world’s most prominent cryptocurrency. The bank’s analysts now predict that the price of Bitcoin could reach a staggering $120,000 by the end of 2024. This optimistic revision comes as Standard Chartered acknowledges the growing acceptance and adoption of digital currencies by institutional investors and the broader financial ecosystem.
Standard Chartered Analysts Expect 20% Upside to Bitcoin Price Forecast
Geoff Kendrick, one of the bank’s top FX analysts, now suggests a 20% upside to that prediction. Kendrick explained in a report that increased profitability for Bitcoin miners per BTC mined allows them to sell less while maintaining cash inflows. This reduction in net BTC supply, combined with other factors, is expected to drive Bitcoin prices higher.
While Bitcoin has experienced an 80% surge since the beginning of the year, it is currently valued at just over $30,200, less than half of its peak price of $69,000, reached in November 2021. The cryptocurrency sector witnessed significant losses amounting to trillions of dollars in 2022, attributed to central banks raising interest rates and the collapse of various crypto firms, including the FTX exchange. However, the recent downfall of several traditional-style banks has played a role in driving the industry’s recovery.
As Standard Chartered bumps up Bitcoin forecast, it has outlined the rationale behind its projected price surge, pointing to the behavior of miners who are responsible for generating approximately 900 new bitcoins per day globally. As per the bank’s analysis, these miners will soon require selling fewer bitcoins to cover their expenses, primarily related to the electricity required to power their supercomputers.
Geoff Kendrick, an analyst at Standard Chartered, approximated that miners have been selling all of their newly minted coins. However, if the price of Bitcoin reaches $50,000, it is anticipated that miners would likely only sell 20-30% of their newly acquired coins, indicating a reduced supply entering the market.
Bitcoin Miners Set to Reduce Daily Sales, Leading to a Significant Drop in Net BTC Supply
The projected reduction in daily bitcoin sales by miners would equate to a decrease from the current 900 bitcoins to a range of 180-270 bitcoins. Over a year, this would decrease miner sales from 328,500 bitcoins to a range of 65,700-98,550 bitcoins. Consequently, the net BTC supply would be reduced by approximately 250,000 bitcoins annually.
In addition to this, in April or May of the following year, there is an anticipated halving in the total number of bitcoins that can be mined each day. This reduction is a result of the built-in supply and issuance mechanism of Bitcoin, which gradually limits the supply to maintain its desirability.
Notably, predictions of exceptionally high valuations have been commonplace during previous Bitcoin rallies. In November 2020, a Citi analyst suggested that Bitcoin could potentially reach as high as $318,000 by the end of 2022. However, the cryptocurrency closed last year with a decline of approximately 65%, settling at $16,500.
Standard Chartered bumps up Bitcoin’s forecast of $120,000 for 2024, reflecting the bank’s confidence in the growing acceptance and adoption of digital currencies. Factors such as increased institutional interest, the rise of decentralized finance and non-fungible tokens, geopolitical uncertainties, and global recognition of cryptocurrencies have contributed to the bullish outlook. The projected reduction in miner sales and the upcoming decrease in bitcoin supply further support the potential for higher prices. However, it is important to note cryptocurrencies’ inherent volatility and risks associated with cryptocurrencies. As the crypto landscape evolves, cautious and diligent investment practices remain crucial.
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