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The Price of Bitcoin Could Reach $50,000 by the End of the Year, Predicts Standard Chartered
Miner Profitability and Bitcoin Price
Standard Chartered predicts that the price of bitcoin could increase to $50,000 by the end of 2023. This increase in price could potentially lead to a doubling of the price by the end of 2024. While macro and U.S. regulatory factors have been hindering the price of bitcoin, miner profitability has also played a role. As the price of bitcoin has fallen, miners have been selling their holdings to raise cash, preventing the cryptocurrency from reaching its full potential. However, if the price of bitcoin rises to around $50,000, the share of newly mined bitcoins being sold should decrease, resulting in a net annual reduction in selling of 250,000 BTC.
Impact on Bitcoin Price
Standard Chartered previously estimated that this reduction in selling of newly mined bitcoins would add $10,000 to the price of bitcoin. However, they now believe this estimate to be too conservative and see upside potential to their end-2024 target of around $100,000. Miners have control over how much of the new supply of bitcoin reaches the market based on their profitability. If they are more profitable per bitcoin mined, they can sell less while still maintaining cash inflows. This decrease in supply of bitcoin can help drive up its price.
Sources of Miner Cash
Miners have three options for raising cash:
- selling bitcoin,
- selling equity, or
- borrowing.
Selling bitcoin is the most viable option for miners due to low equity prices and high interest rates that make borrowing money unlikely. The analysis conducted by Standard Chartered is based on estimates of cash costs per bitcoin mined, which are derived from mining companies' quarterly earnings filings. In addition to miner profitability, other factors such as electricity costs and the prices of mining machines also play a role in the cash costs of mining bitcoin.
In conclusion, Standard Chartered predicts that the price of bitcoin could reach $50,000 by the end of the year, with the potential to double by the end of 2024. The selling of newly mined bitcoins by miners has been limiting the cryptocurrency's upside potential, but a rise in the price of bitcoin could lead to a decrease in selling, resulting in a net reduction in bitcoin supply. Miners can control the supply of bitcoin based on their profitability, and selling bitcoin is the most viable option for raising cash. Overall, miner profitability and the price of bitcoin are closely intertwined factors that can impact the cryptocurrency market.
Implications for New Businesses in the Cryptocurrency Market
The Potential Rise of Bitcoin
Standard Chartered's prediction that the price of bitcoin could reach $50,000 by the end of the year and potentially double by the end of 2024 has significant implications for new businesses in the cryptocurrency market. Such a surge in bitcoin's price would undoubtedly create a more favorable environment for these businesses to thrive.
Increased Investor Interest
As the price of bitcoin rises, it is likely to attract more investor attention. Bitcoin's value proposition as a decentralized digital currency with the potential for substantial returns on investment could fuel increased interest from both individual and institutional investors. This heightened investor interest can create new opportunities for startups looking to enter the cryptocurrency market.
Positive Market Sentiment
A significant rise in bitcoin's price can also generate positive market sentiment. The perception of a bull market can encourage more people to invest in cryptocurrencies and participate in the ecosystem. This, in turn, can create a domino effect, benefiting various businesses involved in areas such as cryptocurrency exchanges, digital wallet providers, blockchain technology development, and other related services.
Enhanced Funding Opportunities
With a higher bitcoin price, miners would have greater profitability and may sell fewer newly mined bitcoins. This decrease in supply would contribute to a potential reduction in bitcoin's circulating supply. As a result, bitcoin's scarcity may drive up its value, making it an attractive asset for venture capitalists and other investors. This enhanced funding environment can provide new businesses with increased access to capital for innovation and expansion.
In conclusion, if Standard Chartered's predictions materialize and bitcoin's price experiences substantial growth, it could have a transformative impact on the cryptocurrency market. New businesses in the industry should closely monitor the evolving landscape and position themselves to capitalize on the potential opportunities arising from increased investor interest, positive market sentiment, and enhanced funding opportunities. As always, careful analysis and strategic decision-making will be crucial for navigating the volatile and dynamic nature of the cryptocurrency market.
Article First Published at: https://www.cnbc.com/2023/07/10/standard-chartered-sees-upside-to-its-2024-bitcoin-target-of-100000.html
