- The collapse of the Silicon Valley bank and other mid-tier US lenders has strengthened the case for Bitcoin as a “decentralized, trustless and scarce digital asset,” Standard Chartered analyst Geoff Kendrick said in a note on Monday.
- Kendrick said this, along with the stabilization of risk assets and speculation that the Federal Reserve will further ease monetary tightening, means that “the path to $100,000 is becoming clearer.”
- Bitcoin is up 66% since the start of the year – although it has fallen sharply since breaching $30,000 two weeks ago.
Bitcoin, the world’s largest cryptocurrency, has skyrocketed in 2023.
Chris Ratcliffe | bloomberg | Getty Images
Standard Chartered said in a note published Monday that the value of bitcoin could jump to as much as $100,000 by the end of 2024.
Standard Chartered analyst Geoff Kendrick said in the note that the collapse of Silicon Valley Bank and other mid-tier US lenders has strengthened the case for bitcoin as a “decentralized, trustless and scarce digital asset.”
“We see the potential for Bitcoin (BTC) to reach the $100,000 level by the end of 2024, as we believe the crypto winter is finally over,” Kendrick said in the report titled “Bitcoin – The Path to the US Dollar.” 100,000 levels.”
“The current pressure in the traditional banking sector is largely conducive to the outperformance of Bitcoin — and validates the original premise of Bitcoin as a decentralized, trustless and scarce digital asset,” added Kendrick.
“Given these advantages, we believe that BTC’s share of the total digital asset market capitalization could move to the 50-60% range in the next few months (from around 45% currently).
Bitcoin was trading at $27,601.55 as of 9:40 AM ET, according to data from CoinGecko.
Kendrick said that the problems with the USD Circle coin and other so-called stablecoins, which aim to achieve a 1-to-1 peg to the USD, have also benefited Bitcoin.
USDC lost its currency peg to the dollar after its issuer, Circle, revealed exposure to SVB. The coin has since regained its $1 value, but its total market capitalization has fallen to $30.7 billion from more than $43 billion since March 10 when the US government placed the bank into receivership, according to CoinGecko data.
Kendrick said this, along with the stabilization of risk assets and speculation that the Federal Reserve will further ease monetary tightening, means that “the path to $100,000 is becoming clearer.”
Bitcoin proponents believe that the digital currency is an asset worth diversifying in times of economic distress. According to the theory, the bitcoin supply is limited to 21 million bitcoins, which means that it must rise as demand for alternative assets grows to avoid the effects of high inflation.
The cryptocurrency failed that test last year when it plunged 65%, marking bitcoin’s second-worst year ever amid a roaring backdrop of billion-dollar fires like FTX and Terra and regulatory restrictions.
Recently, however, the token has been surging, which indicates that a recovery may be on the cards. Bitcoin is up 66% since the start of the year – although it has fallen sharply since breaching $30,000 two weeks ago.
“The concomitant price jump — from less than $20,000 before the SVB wassuance to over $30,000 — has dramatically increased the profitability of bitcoin miners,” Kendrick wrote.
Bitcoin miners are volunteers who dedicate computing power to solving complex cryptographic puzzles in order to verify that transactions are genuine and new currency units to be minted.
“With the price of BTC now well above our $15,000 direct cost estimate, miners are unlikely to sell many coins,” Kendrick said, noting that this would be a positive development for the cryptocurrency since miners are a major driving force for the market given the volume of their property.
“The broader macro backdrop for risk assets is gradually improving as the FOMC nears the end of its tightening cycle. While Bitcoin can trade well when risk assets are affected, the correlations with Nasdaq suggest that it should trade better if risk assets improve on wide range.”
Standard Chartered is not the only one expecting a strong rise in the price of Bitcoin. Last month, at a blockchain conference in Paris, many cryptocurrency industry insiders predicted that bitcoin would hit a new all-time high in 2023 — with an executive at US-based cryptocurrency exchange Gemini telling CNBC that 100,000 dollars may be possible.
Last year, CNBC quizzed several venture capitalists, investors and analysts about how they think the digital currency will perform in 2023. On the bullish end of the spectrum, Tim Draper, founder of Draper Associates and bitcoin revolutionist, said he believes the currency is Encrypted can reach 250 thousand dollars.
Ironically, on the downside, Standard Chartered said the cryptocurrency could drop as low as $5,000 in its 2023 market surprise list.
Some cryptocurrency investors point to the expectation of the next so-called “halving” for bitcoin, which reduces rewards to bitcoin miners by 50%, as a potential catalyst for another big rally in the coin’s price.
— CNBC’s Arjun Kharpal contributed to this report
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