Standard Chartered increases its Bitcoin 2024 forecast to $120,000, influenced by miner behavior and supported by digital currency trends.
In the world of finance, Standard Chartered made waves by sharing an optimistic outlook for the future price of Bitcoin. Initially, this leading bank projected in April that the popular cryptocurrency Bitcoin would hit a $100,000 value by the close of 2024. Yet, a top analyst at Standard Chartered, Geoff Kendrick, revisited these numbers and bumped up the future valuation of Bitcoin to a whopping $120,000. According to Kendrick, there’s a potential for Bitcoin to overshoot the original prediction made by Standard Chartered by 20%.
The mechanism that’s driving this prediction is the behavior of Bitcoin miners. These individuals, responsible for creating new Bitcoins each day, hold significant influence over the digital currency’s value. As the profit per Bitcoin mined increases, miners have less need to sell their haul. The resulting decrease in Bitcoin’s net supply pushes prices higher. Kendrick believes that if Bitcoin reaches the $50,000 mark, miners might only need to sell between 20-30% of their new Bitcoins to maintain their profits. This drop in sales volume would bring the current rate of selling 900 Bitcoins daily down to a more manageable 180-270.
Miner Behavior Shaping the Bitcoin Market
Such a drastic reduction in Bitcoin selling by miners could have profound effects on the market supply. Over a single year, the rate of Bitcoins sold by miners could potentially fall from 328,500 to somewhere between 65,700 and 98,550. This drop could mean an annual supply decrease of about 250,000 Bitcoins.
Bitcoin also has a built-in system designed to control the number of minable Bitcoins each day. Around next April or May, this system is set to slash the number of Bitcoins that can be mined daily. This intentional limitation on Bitcoin’s supply helps maintain its appeal and value.
While Bitcoin has seen high predictions during previous rallies, it doesn’t always meet these expectations. A case in point is when a Citi analyst predicted Bitcoin could reach $318,000 by the end of 2022. Sadly, Bitcoin closed the year significantly lower at $16,500, a 65% drop.
Crypto’s Bright Future Supported by Elon Musk
Crypto’s rising star status has been further amplified this year, particularly for Bitcoin and Ethereum, sparking endless conversations about when the next big price jump might occur. After last year’s significant drop in Bitcoin’s value due to tightening monetary policies led by central banks, the market is now showing signs of recovery. This resurgence is partly due to anticipated economic changes in China.
Elon Musk, the well-known entrepreneur behind Tesla and Twitter, has publicly agreed with a prediction suggesting an entirely digital future for all currencies. This statement came in response to a Twitter user who projected that by 2030, all currencies would be backed by Graphics Processing Units (GPUs), indicating a total shift towards digitalization. Musk agreed with this notion, adding that GPUs might need a new name in the future, reinforcing his support for this digital prediction.
GPUs, initially created to enhance computer graphics for video games, are now crucial for developing artificial intelligence (AI). This growing use of GPUs in AI applications has caused a surge in the stock value of companies like Nvidia.
Nonetheless, many Bitcoin enthusiasts do not like some of Musk’s earlier statements, particularly on Bitcoin. In the past, Musk publicly showed his support for memecoins such as Dogecoin, but Musk previously criticized some of the components of Bitcoin’s algorithm. Furthermore, Musk had also criticized Bitcoin mining given its environmental implications. Therefore, many Bitcoin maximalists feel that Musk supporting Bitcoin for something different rather than leading the way for other altcoins such as DOGE is not necessarily the case.
CBDCs and the Future of Currency
At the same time, various nations are taking steps towards digitalizing their currencies, led by China. These digital versions of traditional currencies, known as central bank digital currencies (CBDCs), are gaining traction. China’s digital yuan, an online-only currency managed by the nation’s central bank and built on similar blockchain technology to Bitcoin, is one example. This digital currency’s successful implementation has pushed other major economies like the US Federal Reserve and the European Central Bank to explore the potential of their own digital currencies.
Alongside this, we’ve seen the emergence and growth of stablecoins, a type of cryptocurrency pegged to traditional currencies like the US dollar. The market capitalization of stablecoins has skyrocketed since their inception ten years ago, demonstrating the growing demand. This shift towards digitalization, moving commerce online, and giving central banks a more detailed oversight of currency use, is expected to boost interest in cryptocurrencies such as Bitcoin and Ethereum.
Will Bitcoin (BTC) Keep Increasing?
In recent days, Bitcoin surged by around 25%, with both fundamental and technical factors playing a huge role. In the technical aspect, BTC broke a descending channel in the 1-day chart, which led to a bullish surge.
Currently, BTC is facing resistance at around $31,000, but it managed to break the double top barrier from the previous high.
Moreover, the support trendline is on the rise, as BTC has room for correction, but it is still on the bullish side.
The MACD of a 1-day chart is currently below the signal line, indicating that there is selling momentum for Bitcoin, which is understandable given the recent resistance tha BTC faced.
The RSI of a 1-day chart recently hit above 70, meaning that BTC became overbought. Hence, BTC could have a correction in the coming days. This correction would be healthy as it could create more room for BTC to surge, other things equal.
The Fibonacci retracement levels suggest that if BTC finds support at the 23.6%, the BTC could have another surge in the short run, ceteris paribus.
As for the longer-term, momentum is also slowly shifting into a bullish one, which could perhaps prepare Bitcoin for a healthy 2024. Given that BTC halving will occur at some point next year, the supply shortage could lead to an increase in the price of BTC, all else equal. Assuming the fundamentals suggest growth, Bitcoin could pioneer another bull run in the long run.
While many might disagree with Standard Chartered’s prediction, BTC could eventually surpass $100,000 in the next bull run. If not in 2024, then it may eventually reach $120,000 in 2025. Still, macroeconomic factors are unpredictable, and it remains to be seen what will happen with the crypto market.
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