Standard Chartered predicts that a $50,000 Bitcoin (BTC) hit could encourage miners to accumulate block rewards.
The UK-based bank predicts that Bitcoin’s price surge could mean miners need to sell fewer coins to maintain cash flow.
Factors Driving Bull Market: Asia and Halving
This accumulation would take more bitcoin out of circulation and further drive up the price of the asset.
Countries that mined the most bitcoins in the period 2019-2022 | Source: Statistics
Earlier this year, several experts noted that the crypto industry was in a “major accumulation phase” before a bull market would materialize. They predicted that Asian traders will propel the markets towards bull as regulation increases.
The Hong Kong Monetary Authority (HKMA) has pressured Standard Chartered to open services to crypto businesses in the region. The HKMA’s new regulation allows licensed exchanges to only list a handful of cryptocurrencies, including Bitcoin, Ethereum and Cardano.
Shortly thereafter, the Korean Parliament passed a law protecting users of virtual assets, while the Monetary Authority of Singapore recently put forward new proposals on asset custody. And Standard Chartered has partnered with US exchange Coinbase to launch crypto trading in Singapore.
Another factor encouraging accumulation is Bitcoin’s halving, which is expected to occur in spring 2024. Every four years, bitcoin miners’ rewards for finding the hash for a block of bitcoin and sending that block halve. Reducing the issuance rate next year will see mining rewards drop to 3,125 BTC per block.
Accordingly, Standard Chartered predicts that Bitcoin will surge to $120,000 by the end of 2024.
Bitcoin liquidity needs to be increased to sustain the rally
However, Bitcoin is currently suffering from a sharp drop in liquidity caused by the exit of two market makers.
Jump Crypto and Jane Street, the former employer of FTX co-founder Sam Bankman-Fried, recently exited crypto, withdrawing $10 million worth of BTC liquidity last quarter. Market makers bring buyers and sellers together and are vital to sustaining rallies. The soaring Bitcoin after the US banking crisis in the first quarter could not be maintained due to a lack of liquidity.
But inflows from several big-name financial firms could soon change that.
BlackRock, the world’s largest investment manager with over $10 trillion in assets under management, recently filed an amended SEC filing to launch a spot bitcoin exchange-traded fund (ETF) submitted. The SEC initially denied the company’s application due to insufficient market surveillance.
Fidelity Investments has also filed another application for a spot ETF after a counterargument from the SEC.
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