Paine provides an in-depth analysis, highlighting key factors that could drive this significant value increase.

Analyst Predicts Potential Supply Shock in Bitcoin Market

Paine’s analysis lies in the forthcoming five years, during which approximately 750,000 new Bitcoins are expected to be mined. Drawing from historical patterns, the analyst estimates that 20-30% of the existing Bitcoin supply will likely become available for sale during the upcoming bull market.

The math behind $1M / #BTC by Jan 3, 2025 is simple:

In the next 5 years, 750,000 #BTC will be mined.

Based on prior cycles, about 20-30% of the existing supply will become available for sale in the bull.

I tend to think it’ll be lower than prior cycles (~10-15%) for many…

— Bit Paine (@BitPaine) January 2, 2024

However, Paine diverges from conventional expectations, positing a more conservative estimate of 10-15% due to several compelling reasons.

These include the recent emergence from a prolonged bear market, the ascendance of Bitcoin maximalists (“maxi hodlers”), the diminishing significance of “crypto” as a generic asset class (with a reduced inclination to rotate funds into alternative cryptocurrencies or “alts”), and the increasing recognition of Bitcoin as a treasury-class asset.

Factoring in these considerations, Paine anticipates an additional 2-6 million Bitcoins entering the market, bringing the total supply in circulation to approximately 2.75-6.75 million.

The catalyst for the projected surge is the anticipated influx of capital into the Bitcoin market. Paine estimates $1-5 trillion of capital is poised to enter the market over the next five years, driven by the increasing accessibility of this asset to institutional and retail investors alike.

Paine’s analysis aligns with the notion that most gains in the Bitcoin market typically occur within the first year following a halving event characterized by speculative fervor. Subsequently, a more gradual distribution of gains is expected.

Bitcoin Surges Above $45,000 and Dumps Later

Bitcoin surged past $45,000 on Tuesday, reaching its highest level since April 2022, as optimism surrounding the potential approval of exchange-traded spot Bitcoin funds fueled the market. The cryptocurrency reached a 21-month peak of $45,922, marking a strong start to the new year.

Investor attention has been focused on the potential approval of a spot Bitcoin ETF by the U.S. Securities and Exchange Commission (SEC). Such approval is anticipated to open the market to a broader investor base and attract significant investments.

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However, the landscape changed later during the day, as BTC slumped by $3,000. This came amid reports that the US securities regulator might actually reject all spot ETF applications in January, just like it has done countless times in the past.

The Binance empire is “trembling” under the threat of enforcement action from US authorities and is losing its top managers – at least 1,500 employees have left in the last 3 months as the company began to cut costs and prepare for a business downturn.

While Binance is still a major player in the crypto industry, the crypto exchange now processes about half of all cryptocurrency buy/sell transactions, up from 70% at the start of the year, according to Kaiko.

The fall of the largest crypto exchange has huge consequences for the industry – and although smaller companies will take its place, liquidity in the market could evaporate in the short term, leading to a sharp decline in the value of tokens.

One institutional trader told The Wall Street Journal that his company conducted emergency exercises to quickly withdraw its assets from Binance in the event of a crash.

Yi He, Binance co-founder and chief marketing officer, promised the company would overcome the challenges in a message to employees last month:

Binance frequently invests in crypto and other projects, including X, formerly known as Twitter. Company co-founder Changpeng Zhao—or CZ, as he is known to X’s 8.6 million followers—is the most famous figure in the cryptocurrency world.

The U.S. Department of Justice has conducted a multi-year investigation that could lead to criminal charges against Binance and Zhao and billions of dollars in fines, according to people with knowledge.

Binance is also facing a Securities and Exchange Commission lawsuit alleging that the company and Zhao illegally operated in the US and misused customer funds.

The cryptocurrency exchange has acknowledged past mistakes but says customers’ money is safe and it is committed to complying with regulators.

“We have worked tirelessly to not only learn from the lessons of the past, but also continue to invest in teams and systems to ensure user protection,” said a spokesperson for the crypto exchange.

Binance launched in China in 2017, although it claims to be headless and has employees scattered around the world. The global crypto exchange website is available to traders almost everywhere, but the situation is changing, particularly in a number of European countries.

Activity on the local US exchange Binance.US has virtually disappeared, and the CEO, chief legal officer and head of risk recently left the company.

A few days before the dismissal of Binance.US CEO Brian Schroder, he said that revenue on the exchange had fallen by 70% since the beginning of the year.

Schroder told employees that Zhao must “deal with regulatory issues, hand over his packages.

US into a blind trust or sell your shares” so that the American platform continues to grow.

According to him, these steps will allow the company to unblock relations with banks and obtain a license. Zhao is the majority owner of Binance.US and the global exchange.

Binance and the Justice Department have been in negotiations for months, and there have been discussions within the cryptocurrency exchange about whether Zhao should resign, according to people familiar with the situation.

According to the WSJ, the turmoil at the company also hit employee morale.

“Some laid-off workers were given zero days notice of their dismissal. They simply couldn’t log in.

Is this a respectful attitude towards them? Do you have 2 weeks to quit? one anonymous employee asked Zhao in a general chat (nine others liked the message, but the question went unanswered).

The Justice Department also opened an investigation into Binance and possible violations of US sanctions against Russia and questioned the company’s chief compliance officer, Noah Perlman.

Pressure from the department was one of the reasons for Zhao’s decision to curtail his business in the Russian Federation, once one of its most important markets.