Key Insights
- Standard Chartered says bitcoin’s drop below $60,000 has opened the door for a decline towards the $50,000-$52,000 range.
- Factors weighing on bitcoin include outflows from U.S. spot ETFs, poor trading volumes for new Hong Kong ETFs, and tighter U.S. liquidity conditions.
- However, the bank maintains its 2024 year-end bitcoin price target of $150,000 and a 2025 target of $250,000.
LONDON (MarketsXplora) – Bitcoin’s breach of the $60,000 level this week has opened the door for more downside towards the $50,000-$52,000 range, according to analysts at Standard Chartered, citing crypto-specific factors and broader macro headwinds.
The world’s largest cryptocurrency fell below $60,000 for the first time since March on Wednesday, extending a decline from record highs above $73,000 hit just weeks ago.
“BTC’s proper break below $60K has now reopened a route to the $50-52K range,” Geoffrey Kendrick, head of forex and digital assets research at Standard Chartered, said in a note.
“The driver seems to be a combination of crypto-specific and broader macro (factors),” he added, pointing to consecutive outflows from U.S. spot bitcoin exchange-traded funds (ETFs) and poor trading volumes for recently launched spot crypto ETFs in Hong Kong.
Kendrick warned there was a risk of some liquidation from bitcoin ETFs, noting over half their positions are currently underwater with an average purchase price below $58,000.
He also said deteriorating U.S. liquidity conditions, strong inflation data reducing chances of Federal Reserve rate cuts, and a backdrop of central bank tightening was weighing on assets like bitcoin that thrive on ample liquidity.
“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,” Kendrick said.
“Re-enter BTC in the $50-52k range or if US CPI on the 15th is friendly.”
Standard Chartered is nonetheless maintaining its year-end 2024 bitcoin price target of $120,000, up from $100,000 previously, on expectations of further inflows into spot crypto ETFs. Its 2025 target price is $250,000.
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Bitcoin has suffered major price swings this year as the Fed’s most aggressive tightening campaign since the 1980s to tame inflation battered speculative assets.
Yet the cryptocurrency is still up around 25% in 2023 as investors maintain hopes for widening mainstream adoption with the launch of bitcoin trading products like ETFs.