Grayscale Explains How Bitcoin Price Could Be Bolstered By Supply Dynamics In 2024

Bitcoin and its price prospects in 2024 have been one of the primary subjects of discussion in the cryptocurrency space over the past few months. Grayscale is among the latest entities to discuss the premier cryptocurrency and speculate on its valuation in the fast-approaching new year.

The crypto asset manager has offered a unique insight into how Bitcoin’s supply dynamics could have a positive impact on the price of the digital currency.

Here’s How Fundamentals Can Influence Bitcoin Price – Grayscale

In a research report published on December 1, Grayscale said that Bitcoin’s supply dynamics may give rise to reduced liquid supply in 2024. And the asset management firm believes that this type of dynamic could cause an increase in the valuation of the premier cryptocurrency next year.

“Bitcoin’s supply is relatively “tight” ahead of potential investor inflows into spot ETF products in the US,” Grayscale stated in the report on Friday. To support this stance, the asset manager cited a Glassnode data that shows that the share of BTC’s supply held by short-term speculators has reached an all-time low.

Furthermore, Grayscale mentioned that a significant portion of BTC is held by entities that may be unwilling to sell into an appreciated market. Moreover, there will be a limit to the growth of new token supply, with the next Bitcoin halving scheduled for 2024.

Grayscale concluded:

This combination of inelastic Bitcoin supply and potential new investor inflows should be positive for valuations, in our view.

As of this writing, BTC is valued at $38,785, reflecting a 1.6% price increase in the past 24 hours. Although the premier cryptocurrency struggled at the beginning of this week, it displayed some positive momentum in the past few days, with $39,000 looking almost inevitable at the moment.

Risks To Positive BTC Valuation In 2024?

Grayscale mentioned that there are scenarios that could pose a risk to the positive outlook for Bitcoin in 2024. According to the asset management firm, these threats “could hold back the crypto recovery, at least over the near term.”

One of these highlighted risks is a “hard landing” (recession) for the United States economy, which could ultimately result in a resumption of Fed rate increases or fewer-than-expected Fed rate cuts. 

Another circumstance that can jeopardize the possibility of a positive valuation for Bitcoin in 2024 is a further delay in regulatory approval of a spot exchange-traded fund (ETF) in the US, according to Grayscale.

It is worth mentioning that the asset manager is one of the several companies currently seeking the approval of the Securities and Exchange Commission (SEC) to launch a spot Bitcoin fund in the United States.

BTC price hovers around $39,000 o the daily timeframe | Source: BTCUSDT chart on TradingView

Featured image from Business Wire, chart from TradingView