Standard Chartered analyst Geoff Kendrick has updated his previous Bitcoin (BTC) price prediction, now forecasting that BTC could reach $120,000 by the end of 2024. This optimistic price update is based on analyses of miners’ reduced sales and changes in profitability dynamics. Previously predicting a price of $100,000 for 2023, Kendrick now believes that considering the changes in miners’ profitability, this figure is a more acceptable baseline.
Kendrick’s price estimate is based on the increasing profitability of mining activities. Miners are maintaining cash flow while making fewer sales after a challenging period. This reduction in Bitcoin supply could lead to rising prices. Kendrick anticipates that in the second quarter of 2024, miners might make a potential sale, with sales gradually decreasing over time. This model historically emerges when the Bitcoin price exceeds the average total cash cost of mining.
A strategic change that could lead to a reduction of about 250,000 in Bitcoin’s net supply may influence prices and alter the inflation rate. According to Kendrick, if the Bitcoin price reaches $50,000 in the first quarter of 2024, the ‘BTC minus all cash costs’ calculation will rise to $30,000, and selling only 27% of the BTC mined in the first quarter of 2024 will generate the same absolute cash surplus as selling 100% in the second quarter of 2023.
Steps taken by Wall Street giants are also affecting the Bitcoin price. Institutions continue their research into creating Bitcoin Exchange Traded Funds (ETFs), and their interest supports Bitcoin’s current rise. Even reports that a BlackRock Bitcoin ETF application was fake were enough to push the market upwards. This institutional support has created a ripple effect that strengthens optimistic predictions.
Mining costs have also undergone changes. A reduction in costs has triggered an upward movement in mining profitability. Some of the largest mining firms have restructured their expenditures to realize this reduction. Drops in energy prices have further increased profitability. The expected “halving” event in April 2024 could trigger a consolidation in the industry and further reduce mining expenses.