Standard Chartered predicts that a Bitcoin (BTC) value of $50,000 could encourage miners to accumulate block rewards.
The UK-based bank speculates that an increase in the price of bitcoin may mean that miners need to sell fewer coins to maintain cash flow.
Factors driving the bull market: Asia and the Hemisphere
This accumulation will take more bitcoins out of circulation and increase the price of the asset.
Earlier this year, several pundits noted that the cryptocurrency industry is in a “massive buildup,” ahead of the bull run. They predicted that Asian traders will lead the markets into bullish territory as the regulations mature.
The Hong Kong Monetary Authority (HKMA) has pressured Standard Chartered to open its services to cryptocurrency firms in the region. HKMA’s new regulation only allows authorized exchanges to list a few cryptocurrencies, including Bitcoin, Ethereum, and Cardano.
Soon after, the Korean Parliament passed the Virtual Asset User Protection Act, while the Monetary Authority of Singapore recently introduced new asset custody proposals. Standard Chartered has partnered with US exchange Coinbase to launch cryptocurrency trading in Singapore.
Another factor promoting accumulation is the bitcoin halving, which is expected to happen in the spring of 2024. Once every four years, rewards for bitcoin miners for finding hashes to broadcast a bitcoin block are halved. Next year’s rate cut will bring mining rewards down to 3.125 BTC per block.
Accordingly, Standard Chartered expects the bitcoin price to rise to $120,000 by the end of 2024.
Bitcoin liquidity needs to increase to sustain the rally
However, at the moment, Bitcoin is experiencing a sharp drop in liquidity due to the exit of two market makers.
Jump Crypto and Jane Street FTX co-founder Sam Bankman-Fried recently exited the cryptocurrency, withdrawing $10 million worth of BTC liquidity last quarter. Market makers match the buyers and sellers, and they are also critical to sustaining rallies. Bitcoin’s rally after the US banking crisis in the first quarter could not be sustained due to lack of liquidity.
However, the inflows generated by several high-profile 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 application with the US Securities and Exchange Commission (SEC) to launch a bitcoin spot exchange fund (ETF). The SEC initially denied the company’s application due to insufficient market oversight.
Fidelity Investments has also re-filed for an instant ETF after an SEC rebuttal.
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