How Bitcoin’s Supply Dynamics Could Impact Price in 2024
Grayscale, a crypto asset manager, has provided insights into how Bitcoin’s supply dynamics could affect its price in 2024. In a recent research report, Grayscale stated that reduced liquid supply may lead to an increase in the valuation of Bitcoin next year. The asset manager pointed out that the share of BTC’s supply held by short-term speculators is at an all-time low, indicating a relatively “tight” supply. Additionally, a significant portion of BTC is held by entities unwilling to sell in an appreciated market. With the next Bitcoin halving scheduled for 2024 and potential investor inflows into spot ETF products in the US, Grayscale believes these factors will be positive for valuations.
Risks to Positive BTC Valuation in 2024
While Grayscale is optimistic about Bitcoin’s valuation in 2024, they also highlighted some risks that could hinder its positive outlook. A “hard landing” for the US economy resulting in Fed rate increases or fewer-than-expected rate cuts is one potential risk mentioned by the asset management firm. Another risk is a further delay in regulatory approval of a spot ETF in the US. Grayscale is among several companies seeking SEC approval to launch a spot Bitcoin fund in the country.
Hot Take: Potential Impact of Bitcoin’s Supply Dynamics on Price
The supply dynamics of Bitcoin play a crucial role in determining its price prospects for 2024. As Grayscale suggests, reduced liquid supply, combined with potential investor inflows and a limited growth of new token supply, may contribute to a positive valuation. However, risks such as a recession in the US economy or regulatory delays in approving a spot ETF could impede this optimistic outlook. As Bitcoin continues to exhibit positive momentum, it remains to be seen how these factors will shape its price trajectory in the coming year.
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