Crypto-Winter Is Over: StanChart Says Supply-Shock Will Send Bitcoin Price To $120,000

Bitcoin miners will hoard BTC and drive up prices in the process, with BTC prices due to top $50,000 this year as a result. Bitcoin is in line to hit $50,000 this year and crack all-time highs in 2024, says Standard Chartered.

In a report quoted by media outlets including Reuters on July 10, the banking giant went on record to announce a BTC price recovery. In the wake of seismic changes in the institutional approach to Bitcoin in the United States, the mainstream narrative around the largest cryptocurrency is shifting rapidly.

Standard Chartered, which just last year forecast the BTC price dropping as low as $5,000, now believes it will end the year ten times higher, publishing a $100,000 end-2024 forecast for bitcoin back in April on the view the so-called “crypto winter” was over.

Now, BTC/USD should reach $50,000 in 2023, the report from the global head of research and chief strategist, Geoff Kendrick, forecasts. Thereafter, Bitcoin should go on to $120,000 by the end of next year.

The reason, Kendrick believes, lies in supply dynamics. As miners dedicate more and more resources to preserving the network, they are also selling less BTC, creating a supply and demand imbalance that will tip in the bulls’ favour.

“Increased miner profitability per BTC (bitcoin) mined means they can sell less while maintaining cash inflows, reducing net BTC supply and pushing BTC prices higher,” the report states. The report takes a deep dive into miner behaviour and how it interplays with their profitability and the outlook for BTC prices

In Q1-2023 (latest full data set), the 12 largest listed miners – which account for 20% of all global BTC mining – sold 106% of mined BTC (stockpiles pushed this above 100%). We estimate that this was slightly below 100% for Q2.

However, if the BTC price rises to around USD 50,000, which we expect by the end-2023, the share of newly mined being sold should fall to 20-30%. That is a net annual reduction in selling of BTC 250,000 – a large number relative to Bitcoin market turnover.

We previously predicted that this driver would add USD 10,000 to the Bitcoin price; we now think this estimate is too conservative, and we, therefore, see an upside to our end-2024 target of around USD 100,000.

A BTC supply reduction of 250,000 would also materially affect the gross BTC inflation rate (currently around 1.7% y/y, which is based on 100% of mined BTC being sold).

If only 20-30% is sold, the net inflation rate falls to around 0.4% y/y – below what the gross inflation rate will be after the next halving in April-May 2024.

Standard Chartered is already active in crypto, with its crypto custody platform Zodia raising $36 million in a Series A funding round in April.

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