Grayscale suggests supply dynamics in 2024 may drive up Bitcoin's price

Reduced Liquid Supply of Bitcoin Expected Next Year

Grayscale Investments has stated in a research report that the supply dynamics of Bitcoin may result in a reduced liquid supply early next year. This coincides with the potential approval of spot Bitcoin ETF filings, which could have a positive impact on the digital asset’s valuation. Grayscale noted that a significant portion of Bitcoin is held by entities that may be slow to sell into an appreciated market. The asset manager is one of many firms seeking approval for a spot Bitcoin product from the Securities and Exchange Commission.

Potential Positive Impact on Valuations

The report also highlighted that next year’s Bitcoin halving could limit the growth of new BTC supply. Grayscale believes that the combination of inelastic Bitcoin supply and potential investor inflows into spot ETF products will be positive for valuations.

Risk of a ‘Hard Landing’ for the US Economy

However, Grayscale acknowledged that there are conditions that could counter the expectation of positive price appreciation for Bitcoin in 2024. One such condition is a possible “hard landing” for the US economy next year, which could involve a resumption of Fed rate increases or regulatory delays in approving a spot Bitcoin ETF.

These risks have the potential to hold back the ongoing crypto recovery, at least in the near-term, according to Grayscale.

Current Price of Bitcoin

At the time of writing, the largest digital asset by market capitalization was trading at $38,580, showing a nearly 3% increase in the past 24 hours.

About the Author

Brian McGleenon is a UK-based markets reporter for The Block. He has worked as a financial journalist and producer for multiple news outlets over the years, such as Fuji Television, The Independent, Yahoo Finance, The Evening Standard, and The Daily Express. Brian is also a screenwriter and producer with one feature film produced and one in development with Northern Ireland Screen. Apart from web3 and cryptocurrency developments, he is also interested in geopolitics, environmental issues, artificial intelligence, and longevity research.

Get in touch via email [email protected].

Hot Take: Potential Impact of Reduced Liquid Supply on Bitcoin Valuation

Grayscale Investments predicts that the reduced liquid supply of Bitcoin next year, combined with potential investor inflows into spot ETF products, could have a positive impact on the valuation of the digital asset. This tightening supply dynamic may coincide with the approval of spot Bitcoin ETF filings. However, there are risks to consider, such as a ‘hard landing’ for the US economy or regulatory delays in approving a spot Bitcoin ETF. These factors could hinder the ongoing crypto recovery in the near-term. Nevertheless, Bitcoin’s current market price shows a positive trend with a 3% increase in the past 24 hours.