The bank believes miners will soon begin hoarding their coins and available market supply will stifle.

Standard Chartered predicts that the value of the leading cryptocurrency, Bitcoin, could reach $50,000 this year and $120,000 by the end of 2024. The recent surge in Bitcoin's price is expected to incentivize miners to hoard more of the cryptocurrency. In April, Standard Chartered had already forecasted a value of $100,000 for Bitcoin by the end of 2024, but Geoff Kendrick, one of the bank's top FX analysts, now suggests a 20% "upside" to that prediction.

Kendrick explains that the increased profitability for miners per Bitcoin mined allows them to sell fewer coins while still maintaining cash inflows. This reduction in supply would contribute to driving Bitcoin prices higher. Despite an 80% price jump since the beginning of the year, Bitcoin's current level of just over $30,200 remains significantly below its peak of $69,000 in November 2021.

The crypto sector suffered significant losses in 2022 as central banks raised interest rates and several crypto firms, including the FTX exchange, experienced collapses. However, the collapse of several traditional-style banks this year has fueled a rebound in the sector.

Standard Chartered's prediction is based on the expectation that miners, responsible for minting around 900 new Bitcoins daily worldwide, will need to sell fewer coins to cover their costs, mainly related to electricity for powering supercomputers. Kendrick estimates that miners have recently been selling 100% of their newly minted coins. If the price reaches $50,000, they would probably only sell 20-30%.

Kendrick compares this reduction to miners selling only 180-270 coins per day instead of the current 900. Over a year, this would lead to a decrease in miner selling from 328,500 to a range of 65,700-98,550 coins, effectively reducing the net supply of Bitcoins by approximately 250,000 per year.

Additionally, next April or May, the total number of Bitcoins mined each day is set to halve due to a built-in supply mechanism that gradually limits the issuance to maintain its appeal.

While predictions of high valuations are not uncommon during Bitcoin's past rallies, it's worth noting that a Citi analyst suggested in November 2020 that Bitcoin could reach as high as $318,000 by the end of 2022. However, the cryptocurrency closed last year at around $16,500, marking a decline of about 65%.