The firm’s head of digital assets research links Bitcoin’s downturn to US inflation and ETF outflows.
Stubborn inflation, the unlikelihood of near-term rate cuts, and cooling demand for spot Bitcoin exchange-traded funds (ETFs) – all of these factors could prolong Bitcoin’s price correction to $50,000, according to Standard Chartered.
“BTC’s proper break below $60K has now reopened a route to the $50-52K range,” Geoffrey Kendrick, head of digital assets research at Standard Chartered told The Block, adding that the downward trend is attributed to a mix of crypto-specific factors and broader economic conditions.
Bitcoin’s ongoing price decline coincides with a series of outflows from US spot Bitcoin ETFs and the lukewarm reception of similar products in Hong Kong.
Kendrick points out that liquidity measures in the US have deteriorated, which negatively affects assets like cryptos that typically benefit from high liquidity environments.
The backdrop of strong US inflation and the reduced likelihood of Fed rate cuts are further contributing to tightening liquidity, impacting investment flows into riskier assets like Bitcoin, he noted.
Bitcoin wobbles ahead of the upcoming FOMC meeting. Yesterday, Bitcoin’s price plunged as low as $59,500 and extended its correction to $57,000 earlier this morning in the lead-up to the Fed’s key decision.
Kendrick suggests that a potential re-entry into Bitcoin could be considered in the $50,000 to $52,000 range, especially if upcoming US Consumer Price Index (CPI) data proves to be favorable, potentially easing some macroeconomic pressures.
“Of course, liquidity matters when it matters, but with a backdrop of strong U.S. inflation data and less likelihood of Fed rate cuts, it matters at the moment,” he explained. “Re-enter BTC in the $50-52k range or if US CPI on the 15th is friendly.”
Standard Chartered doubles down on its $150,000 price target by year-end
Kendrick stated in an interview with Bloomberg BNN last month that Bitcoin could hit $150,000 by the end of this year and rise to $200,000 by the end of 2025.
Despite the current market dynamics, he reaffirmed these price targets for 2024 and 2025. The analyst told The Block that while progress might be slow at first, a significant rally could be expected closer to the anticipated Trump election victory, particularly from September through to the end of the year.
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