Bitcoin needs sovereign buying or macro clarity to end risk-off sentiment for breakout – StanChart
Standard Chartered head of digital assets research Geoffrey Kendrick believes Bitcoin’s (BTC) recent price action suggests that the flagship crypto may require sovereign accumulation or improved geopolitical clarity to push higher amid the current risk-off market sentiment.
In a March 11 research note shared with CryptoSlate, Kendrick highlighted that Bitcoin’s crash this week has brought price levels close to its trading range on Nov. 6, 2024, the day after the US presidential election.
BTC hit a four-month low of $76,500 on March 10 before attempting a recovery above $80,000, while its 30-day implied volatility hovered around 55%.
Kendrick noted that Bitcoin has fallen in tandem with major US tech stocks as risk assets continue to struggle against rising macroeconomic concerns,
Kendrick compared Bitcoin’s recent performance to that of the so-called “Magnificent 7” tech stocks, which include Apple, Microsoft, Nvidia, Alphabet, Meta, Tesla, and Amazon. These stocks have also seen sell-offs amid market uncertainty.
Since the inauguration of the current US administration, Bitcoin has tracked these stocks on a volatility-adjusted basis, reinforcing the argument that broader risk asset sentiment is a key driver of price movements.
Tesla, Meta, and Apple have been the closest equity counterparts to Bitcoin in terms of adjusted performance, he noted. The data suggests that Bitcoin’s price action is more reflective of widespread risk-off sentiment rather than asset-specific challenges.
Kendrick noted that Bitcoin continues to face further downside risk in the short term due to macro uncertainties and needs a major catalyst to resume its uptrend.
He wrote:
“The question now is which comes first: a recovery in risk assets or positive Bitcoin-specific news, such as sovereign buying from the US or other nations.”
The prospect of Federal Reserve rate cuts remains crucial. A faster-than-expected shift in policy, potentially at the Fed’s May meeting, could stabilize risk markets. Current market expectations for a May rate cut have risen from 50% to 75%, increasing the likelihood of a policy shift that could benefit Bitcoin.
In the near term, Kendrick said Bitcoin could fall below the Nov. 6 price range, indicating the potential for further downside. However, he reaffirmed his long-term bullish stance, maintaining his previous target of $200,000 by 2025 and $250,000 by 2026.
He argued that recent volatility reinforces the case for future Fed rate cuts, which could serve as a tailwind for Bitcoin.
Kendrick advised investors to “stay nimble” and reaffirmed his broader thesis that Bitcoin’s long-term trajectory remains intact despite enar-term turbulence.
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