Standard Chartered Bank has warned that bitcoin’s price could potentially decline to $50,000. The head of digital asset research at the bank attributed this forecast to a mix of crypto-specific factors and broader macroeconomic influences. Additionally, he warned about the risk of liquidation for some spot exchange-traded fund (ETF) positions, emphasizing that over half of them are currently underwater.

Bitcoin Could Drop to the $50K-$52K Range

Standard Chartered Bank believes that bitcoin’s recent fall below the $60,000 mark might signal the beginning of further challenges ahead. Geoffrey Kendrick, who leads the bank’s forex and digital assets research, remarked on Wednesday:

BTC’s proper break below $60K has now reopened a route to the $50K-$52K range … The driver seems to be a combination of crypto-specific and broader macro.

Kendrick highlighted crypto-specific concerns, including consecutive days of outflows from U.S. spot bitcoin exchange-traded funds (ETFs) and a tepid response to the recent introduction of spot bitcoin and ether ETFs in Hong Kong. He cautioned: “More than half of the spot ETF positions are underwater and so the risk of liquidation of some of them must be considered as well.” In addition, he partially attributed the recent decline in bitcoin’s price to the low volume of Hong Kong spot crypto ETFs.

The Standard Chartered analyst also stressed that aside from crypto-specific concerns, broader macroeconomic trends are exerting pressure on bitcoin’s price movements. He noted the rapid deterioration of liquidity measures, especially in the U.S., since mid-April, adding that assets such as cryptocurrencies, which typically benefit from liquidity, are experiencing the effects of these tightening conditions.

Kendrick opined: “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 continued:

Re-enter BTC in the $50K-$52K range or if US CPI on the 15th is friendly.

Standard Chartered maintains its bitcoin price projections for the current and upcoming years. The bank recently increased its end-of-year forecast for 2024 from $100,000 to $150,000, while also suggesting that bitcoin could potentially reach $250,000 in 2025, contingent on continued strong inflows into spot bitcoin ETFs and potential purchases by forex reserve managers starting this year. Commenting on when his price prediction will come true, Kendrick said: “It may take a little while now. But I think when we get closer to Trump election victory we can rally hard from say Sept. to year-end.”

Source : Bitcoin News / May 3, 2024