The UK’s Standard Chartered bank projects Bitcoin to hit a six-figure exchange value as mining firms will likely hold on to their hard-earned coins, constricting the market supply.
The multinational bank considers a 300% leap for Bitcoin feasible by December 2024. The forecast of $120,000 is leveraged on Bitcoin miners’ likely decision to hoard their proceeds. The move to hold their mined coins longer would cut off the market from a reliable supply stream. This would ultimately erode a significant addition to the circulating supply.
Revisiting the Bitcoin Price Turnaround
A leading FX analyst at Standard Chartered, Geoff Kendrick, observes that higher margins for the bitcoin miners convince them to dispose of less of the coins to maintain cash inflow. The decision to lower the net BTC supply pushes the exchange value for the circulating cryptos higher.
The Standard Chartered analyst indicated that Bitcoin had realized an 82% turnaround to exchange at a range above $30200 from the $16600 price on January 1. The report reveals that mining firms receive $6.25 bitcoins as a reward per block. The bullish momentum is benefiting the mining industry’s revenue since the onset of 2023. The bullish steam is reversing the downtrend in the latter half of 2022.
Standard Chartered report illustrated that the downtrend became visible in mid-2022 when bitcoin prices plunged. The dip prompted the leading mining firms led by Core Scientific and Riot Platforms to empty the majority of their bitcoins on the market. The move accelerated Bitcoin’s price free fall to exchange below $18000.
Miners Enticed by Current Bitcoin Prices Selling All Coins
Multinational bank analysts consider the current period rewarding for the miners. Most of the mining firms illustrate that with Bitcoin finding a support level above $30000, it portrays a possible restoration of upswing. Data provided by on-chain analytics Glassnode demonstrates the unique movement of Bitcoins from short-term holders to term hands in the past months. The analysts consider such a trend signaling the rediscovery of the primary component characterizing past Bitcoin bull markets.
Kendricks identified long-term holders as parties that do not move their coins held for a period exceeding 155 days. Often, they are less likely to portray activity in the short term. The report revisited the Bitcoin shrimps comprising small entities whose BTC ownership is barely 1 unit. The analysts consider the entity to stack the statistics aggressively compared to the peak in the bull market in the last quarter of 2017. This group is taking more coins than the miners are producing.
Miners to Dispose Less Units Fuelling the Bitcoin Bullish Momentum
Kendricks projects that the majority of the miners are selling the entire units mined to recover costs. The analyst considers that for Bitcoin price to rise above $50000 by December 2023, the share of coins miners sell should decline to 20-30%. The reduced addition to the circulating supply would yield a bullish feedback loop.
Kendricks indicates that bitcoin miners should lower the bitcoins sold daily from 900 units to 180-270. The change translates to an annual reduction in the supply from 328,500 to 65700 to 98550. The decline amounts to withdrawing 250000 bitcoins annually from circulation.
Beyond leveraging the miners, markets anticipate higher prices if the US Securities and Exchange Commission (SEC) approves the Bitcoin spot exchange-traded fund (ETF). BlackRock is leading fund and asset managers applying for the spot in the Bitcoin ETF. The firm has a favorable regulatory approval of 575:1.
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