- According to a research report released by Grayscale Investments on Friday, Bitcoin supply dynamics could lead to decreased liquidity supply early next year.
- Grayscale stated, “Bitcoin supply is relatively tight before potential investor inflows into spot ETF products in the U.S.”
- Grayscale mentioned conditions that could invalidate the thesis of guaranteed positive price increases for Bitcoin in 2024.
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The latest report from digital asset manager Grayscale Investments evaluates the impact of Bitcoin supply dynamics on the price.
Grayscale Examines Bitcoin Supply Dynamics
According to a research report released by Grayscale Investments on Friday, Bitcoin supply dynamics could lead to decreased liquidity supply early next year, and this situation may coincide with the potential approval of spot Bitcoin ETF applications, positively affecting the valuation of the digital asset.
Grayscale emphasized, “Bitcoin supply is relatively tight before potential investor inflows into spot ETF products in the U.S.,” pointing out that a significant portion of Bitcoin is held by assets that may be slow to sell in an appreciating market. The asset manager is one of many companies seeking approval for an existing spot Bitcoin product.
The report also noted that next year’s Bitcoin block reward halving could limit the growth of new BTC supply. Grayscale stated, “The combination of inflexible Bitcoin supply and potential new investor inflows should be positive for valuations in our view.”
Risk of a ‘hard landing’ for the U.S. economy
However, Grayscale mentioned conditions that could invalidate the thesis of guaranteed positive price increases for Bitcoin in 2024. Among them is the possibility of a “hard landing” for the next year. The report indicated that such an outcome could see “the resumption of Fed interest rate hikes or less than expected Fed interest rate cuts and/or a prolonged delay in regulatory approval for a spot Bitcoin ETF for the U.S. market.”
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According to Grayscale, these risks could significantly hinder the ongoing crypto recovery, at least in the short term. The largest digital asset by market capitalization was trading at $38,800, according to data, experiencing nearly a 3% increase in the last 24 hours.
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