NEW YORK – Standard Chartered is ramping up its bullish Bitcoin prediction, targeting as much as US$120,000 (S$161,000) by the end of 2024 – almost quadruple the current price – as increasingly cash-rich miners reduce their sales of the token.
“Increased miner profitability per BTC mined means they can sell less while maintaining cash inflows, reducing net BTC supply and pushing BTC prices higher,” Geoff Kendrick at Standard Chartered wrote on Monday.
Bitcoin mining is an energy-intensive process in which miners use powerful computers to validate transaction data on the Bitcoin blockchain, keeping the network running and earning the token as a reward.
They profit by selling the awarded Bitcoin into the market. When Bitcoin prices are higher miners can cover costs selling fewer Bitcoin, holding on to more in the expectation of higher prices in the future.
Bold Bitcoin price predictions are nothing new. Among the most bullish is from Ark Investment Management’s Cathie Wood, who doubled down on her prediction that Bitcoin will hit US$1 million by 2030 as recently as November.
Standard Chartered forecast in April that Bitcoin could reach US$100,000 per coin by the end of next year. That underestimated the impact higher miner profitability would have on reducing the supply of Bitcoin in the marketplace, they now say, and expect the price to hit US$50,000 by the end of this year before jumping to as much as US$120,000 in 2024.
“At recent prices, they [miners] have been selling 100 per cent of new BTC; at USD 50,000 we think they would sell 20-30 per cent,” Mr Kendrick wrote.
Adding to supply pressure is an upcoming “halving” in 2024, a preprogrammed event that will reduce the supply of Bitcoin rewards available to miners from about 900 per day to about 450. Occurring every four years, it keeps Bitcoin below its limit of 21 million tokens.
Bitcoin, the crypto sector’s largest asset, was trading at US$30,309 as of 1.40pm in New York. Its 83 per cent gain this year still leaves it well below its record high of nearly US$69,000 in November 2021.
Its recent jump coincided with a raft of filings for Bitcoin exchange-traded funds in the United States, including an application by BlackRock, which has a near-pristine record of filing for and receiving approval for ETFs. BLOOMBERG