bitcoin and its price prospects in 2024 have been one of the main topics of discussion in the cryptocurrency space over the past few months. Grayscale is among the latest entities to discuss the leading cryptocurrency and speculate on its valuation in the rapidly 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.
This is how fundamentals can influence the price of bitcoin: Grayscale
in a Investigation report Posted on December 1, Grayscale said that bitcoin supply dynamics could lead to a reduction in liquid supply in 2024. And the asset management company believes that this type of dynamic could lead to an increase in the valuation of the main cryptocurrency next year.
“bitcoin supply is relatively 'tight' ahead of potential investor inflows into spot ETF products in the US,” Grayscale stated in Friday's report. To support this stance, the asset manager cited Glassnode data showing that the proportion of btc 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 not be willing to sell in an appreciating market. Additionally, there will be a limit to the growth of the supply of new tokens, and the next bitcoin halving is planned for 2024.
Grayscale concluded:
In our view, this combination of inelastic bitcoin supply and potential inflows of new investors should be positive for valuations.
At the time of writing, btc is valued at $38,785, reflecting a 1.6% price increase in the last 24 hours. Although the leading cryptocurrency struggled earlier this week, it has shown some positive momentum in recent days, with $39,000 looking almost inevitable at the moment.
Risks for a positive btc valuation in 2024?
Grayscale mentioned that there are scenarios that could pose a risk to bitcoin's positive outlook in 2024. According to the asset management firm, these threats “could slow down the recovery of cryptocurrencies, at least in the short term.”
One of these prominent risks is a “hard landing” (recession) of the United States economy, which could ultimately result in a resumption of rate increases by the Federal Reserve or lower rate cuts than the expected ones.
Another circumstance that may jeopardize the possibility of a positive bitcoin valuation in 2024 is a new 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 several companies currently seeking approval from the Securities and Exchange Commission (SEC) to launch a bitcoin spot fund in the United States.
<img decoding="async" class="aligncenter size-medium" src="https://technicalterrence.com/wp-content/uploads/2023/12/Grayscale-explains-how-Bitcoin-price-could-be-bolstered-by-supply" alt="bitcoin” width=”2174″ height=”1442″/>
btc price hovers around $39,000 o the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from Business Wire, chart from TradingView
