Key Points
- Standard Chartered Bank predicts a potential drop in Bitcoin’s price to the $50-52K range.
- Crypto-specific and broader macroeconomic issues are influencing Bitcoin’s price dynamics.
Standard Chartered Bank has suggested that the recent fall in the price of Bitcoin below the $60,000 threshold could be a sign of further declines to come, potentially down to the $50,000-$52,000 range. This prediction was made by Geoffrey Kendrick, the head of the bank’s forex and digital assets research division.
Factors Influencing the Bitcoin Price
Kendrick pointed out that both crypto-specific and wider macroeconomic factors seem to be driving this trend. In terms of crypto-specific factors, Kendrick highlighted five consecutive days of outflows from U.S. spot Bitcoin exchange-traded funds (ETFs) and a lukewarm response to the recent introduction of spot Bitcoin and Ether ETFs in Hong Kong.
With continued outflows from U.S. spot Bitcoin ETFs, and the average ETF purchase price currently below $58,000, there is a potential risk of liquidation. Kendrick noted that over half of the spot ETF positions are now in a loss-making position, increasing the likelihood of some being liquidated.
Macroeconomic Influences
In relation to the Hong Kong spot ETFs, Kendrick pointed out that their trading volume was low, which has contributed to the recent drop in Bitcoin’s price. Beyond these crypto-specific factors, Kendrick also drew attention to broader macroeconomic trends that are impacting Bitcoin’s price dynamics.
He noted that liquidity conditions, especially in the U.S., have worsened rapidly since mid-April. This is affecting assets like crypto, which often rely on liquidity. Kendrick stated, “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.”
In terms of future investment in Bitcoin, Kendrick suggested that it would be wise to re-enter the market when Bitcoin’s price falls to the $50-52k range or if the U.S. CPI data released on the 15th is favourable.
Last month, Standard Chartered revised its end-of-2024 Bitcoin price prediction to $150,000, up from its previous forecast of $100,000. The bank also suggested that Bitcoin’s price could potentially reach $250,000 in 2025 if strong inflows into spot Bitcoin ETFs continue and/or if forex reserve managers begin purchasing Bitcoin this year.
