- The collapse of Silicon Valley Bank and other mid-tier US lenders has strengthened the case for bitcoin as a “decentralised, trustless and scarce digital asset,” Standard Chartered analyst Geoff Kendrick said in a note on Monday.
- This, combined with a stabilization of risk assets and speculation that the Federal Reserve will further ease monetary tightening, means “the path to the $100,000 level is becoming clearer,” Kendrick said.
- Bitcoin is up 66% since the start of the year – although it has fallen sharply since breaking $30,000 two weeks ago.
Bitcoin, the world’s largest cryptocurrency, has been surging in 2023.
Chris Ratcliffe | Bloomberg | Getty Images
Bitcoin’s value could jump to as much as $100,000 by the end of 2024, Standard Chartered said in a note published on Monday.
The collapse of Silicon Valley Bank and other US mid-tier lenders has strengthened the case for bitcoin as a “decentralized, trustless and scarce digital asset,” Standard Chartered analyst Geoff Kendrick said in the note.
“We see the potential for Bitcoin (BTC) to reach the USD 100,000 level by the end of 2024 as we believe the much talked about ‘crypto winter’ is finally over,” Kendrick said in the report, titled “Bitcoin — Pathway to the USD “. 100,000 level.”
“The current stress in the traditional banking sector is highly favorable to BTC outperformance – confirming the original premise of Bitcoin as a decentralized, trustless and scarce digital resource,” Kendrick added.
“Given these advantages, we believe that BTC’s share of the total market value of digital assets could move into the 50-60% range in the coming months (from around 45% currently).”
Bitcoin was trading at $27,601.55 as of 9:40 a.m. ET, according to CoinGecko data.
The disadvantages of Circle’s USD Coin and other so-called stablecoins, which aim to achieve a 1-to-1 link to the US dollar, have also benefited bitcoin, Kendrick said.
USDC lost its peg to the dollar after issuer Circle disclosed 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 bank was placed into receivership by the US government, according to CoinGecko data.
This, combined with a stabilization of risk assets and speculation that the Federal Reserve will further ease monetary tightening, means “the path to the $100,000 level is becoming clearer,” Kendrick said.
Proponents of bitcoin maintain that the digital currency is an asset worth diversifying into in times of economic distress. As the theory goes, bitcoin has a limited supply of 21 million bitcoins, meaning it should appreciate 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 on record amid a tumultuous backdrop of multibillion-dollar flameouts like FTX and Terra and regulatory cutbacks.
More recently, however, the token has been climbing, suggesting that a recovery may be on the cards. Bitcoin is up 66% since the start of the year – although it has fallen sharply since breaking $30,000 two weeks ago.
“The associated price jump – from below US$20,000 before the SVB issuance to above US$30,000 – has dramatically increased the profitability of Bitcoin mining companies,” Kendrick wrote.
Bitcoin miners are volunteers who allocate computing power to solve complex cryptographic puzzles to verify that transactions are genuine and create new units of currency.
“With the price of BTC now well above our estimate of $15,000 for direct costs, it is unlikely that miners will sell many coins,” Kendrick said, noting that this would be a positive development for the cryptocurrency since miners are a key driver for the market. given the size of their holdings.
“The broader macro backdrop for risky assets is also gradually improving as the FOMC nears the end of its tightening cycle. While BTC may trade well when risky assets suffer, correlations to the Nasdaq suggest it should trade better if risky assets broadly improve.”
Standard Chartered is not the only one predicting a strong rise in bitcoin’s price. Last month, at a blockchain conference in Paris, several crypto industry insiders predicted that bitcoin would hit a new all-time high in 2023 — with an executive at US cryptocurrency exchange Gemini telling CNBC $100,000 could be a possibility.
Last year, CNBC asked several venture capitalists, investors and analysts how they think the digital currency will perform in 2023. On the bullish end of the spectrum, Draper Associates founder and noted bitcoin bull Tim Draper said he believed the cryptocurrency could reach $250,000.
Ironically, Standard Chartered said the cryptocurrency could fall as low as $5,000 in a list of market surprises for 2023.
Some crypto-investors are pointing to anticipation of the next so-called bitcoin “halving,” which cuts rewards to bitcoin miners by 50%, as a potential catalyst for another monster rally in the coin’s price.
— CNBC’s Arjun Kharpal contributed to this report