Bitcoin price has held steady in the past few months, and is holding near a record high as demand remains high. The coin was trading at $101,760, which is about 570% from its lowest point in 2022, making it the best-performing major asset.
Bitcoin demand and supply dynamics
All signs show that Bitcoin has strong demand and supply dynamics, which explains why the price may continue rising in the near term.
Bitcoin has a supply cap of 21 million coins and the total supply as of now is 19.79 million. This leaves about 1.21 million coins to be mined.
At the same time, millions of coins have been lost permanently, while the amount of Bitcoins in exchanges has dropped to the lowest level in years. These coins stand at about 2.2 million, meaning that millions more are held in self-custody accounts.
Bitcoin’s mining difficulty has continued to rise, especially because of the halving events. It is unclear whether many mining companies will produce enough coins in the next few decades.
Therefore, Bitcoin’s supply will continue being a big challenge in the next few years. At the same time, demand is expected to continue rising in the next few years. Recent data shows that spot Bitcoin ETFs are seeing robust inflows. These funds have had over $35 billion in inflows this year, a trend that may continue in the next few years.
Most importantly, companies will likely continue buying more coins in the future. Data shows that companies like MicroStrategy, Marathon Digital, Riot Platforms, Tesla, and Coinbase owns thousands of coins. Other large holders are firms like Block, Galaxy Digital, Semler Scientific, and NEXON have continued to buy more coins.
The next wave of purchases will likely come from mainstream companies like Apple, NVIDIA, and Amazon. These firms have seen MicroStrategy’s success and will likely want to replicate it over time.
Countries to start buying BTC
After that, countries will likely start buying these coins. Already, the US holds thousands of Bitcoins, which it has seized from criminal organizations. Donald Trump is considering converting these coins into a strategic reserve.
If this happens, more countries will likely embrace Bitcoin as their reserve assets. Already, most countries like China, Russia, and Turkey have invested in gold, and many analysts see Bitcoin as a digital gold. If this happens, it will make Bitcoin, a rare asset, rarer.
A main catalyst for such a move will be the soaring global debt, which has been in a strong uptrend. The US now has over $36.3 trillion in public debt, a figure that is growing by $1 trillion each quarter. This means that it will cross the $40 trillion mark in the next few years.
Other countries are not doing well either. For example, China has over 71 trillion RMB in debt or 69% of the GDP, a figure that is growing. The same trend is happening in Europe, where a country like France is seeing a near 10% deficit.
Therefore, there are chances that these countries will move to Bitcoin, which is seen as a good asset.
Bitcoin price analysis
The weekly chart shows that the price of Bitcoin has been in a strong bull run in the past few months. It has constantly remained above all moving averages and formed a cup and handle pattern.
If we measure the depth of the cup, we can assume that the coin will rise to $122,000 in this bullish cycle. If this happens, it will then suffer a brief pullback and then resume the strong bullish trend in the next few months. Over time, Bitcoin may rise to over $200,000.
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