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Standard Chartered has raised its 2024 Bitcoin forecast to $120,000, a dramatic increase from the $100,000 prediction made in April, according to a Reuters report. The financial institution based in the United Kingdom suggests that an expected increase in the price of Bitcoin may encourage miners to retain a larger share of the digital asset.
Geoff Kendrick, a leading FX analyst at the bank, expected a potential increase of 20% in the first forecast. He points to the increase in mining profits as the reason for this change:
“Increased miner profit per BTC mine means they can sell less while maintaining cash inflows, reducing the net supply of BTC and pushing the price of BTC higher.”
Despite an incredible 80% increase in price since the beginning of the year, Bitcoin is currently trading at more than $30,200, which is lower than the historic high of $69,000 set for November 2021, according to CoinGecko.
Standard Chartered suggests that the proposed increase is largely due to miners needing to sell less than 900 new BTC produced per day to cover operational costs, especially energy consumption. At a price point of $50,000, Kendrick estimates that miners will only need to sell 20-30% of their new coins.
A decrease of this magnitude will reduce the daily Bitcoin trade from the current 900 to only 180-270, a significant decrease in the annual supply of BTC. In addition, Bitcoin’s supply mechanics, which will eliminate half of the daily mining limit in April or May 2024, will further contribute to this decline.
Bitcoin will undergo a halving in 2024, which means that the reward for mining 1 BTC will drop by half, making BTC more valuable because there will be less BTC in circulation. The last time Bitcoin halved, the industry saw an all-time high of $69,044.
While speculative high-value Bitcoin predictions have been a regular occurrence in the past, it is important to note that these predictions often fail. For example, a Citi analyst predicted that Bitcoin will reach $318,000 by the end of 2022, but BTC ended the year at about $16,500 – a 65% drop – cited by Reuters.