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Standard Chartered’s Global Head of Digital Assets Research, Geoff Kendrick, is warning investors of potential risks facing Bitcoin.
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Kendrick notes that a significant drop below $90,000 could trigger a wave of selling, impacting the broader digital asset market.
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“Prices of all other digital assets would likely follow,” Kendrick stated, highlighting the interlinked nature of the crypto market.
Geoff Kendrick of Standard Chartered warns Bitcoin could face risks below $90,000, potentially affecting the entire digital assets market.
Potential Downside Risks for Bitcoin Below $90,000
In a recent market analysis, Geoff Kendrick expressed considerable concern over Bitcoin’s stability, particularly if it were to breach the crucial support level of $90,000. According to Kendrick, a “clean break” below this threshold could result in additional downward pressure, leading Bitcoin to potentially fall into the low $80,000s. He articulated, “We think that a clean break below $90,000 for bitcoin would open up 10% of further downside near-term, to the low $80,000s.” This projection underscores the volatility that currently plagues the cryptocurrency market, painting a cautious picture for investors contemplating their next moves.
Market Interconnectedness and Macro Influences
Kendrick further elaborated on the interconnectedness of digital assets, noting that prices are not isolated to Bitcoin. “Prices of all other digital assets would likely follow,” he said, emphasizing how Bitcoin’s performance directly influences the broader market. This trend has been exacerbated by macroeconomic conditions influenced by monetary policy shifts, particularly the Federal Reserve’s recent hawkish stance. As Kendrick noted, “[D]igital assets have been caught up in a macro-driven sell-off since Fed Chair Powell turned hawkish on Dec. 18.” This larger economic backdrop is critical for understanding the dynamics affecting Bitcoin and the altcoin space.
Spot ETF Purchases: An Overview
Another significant factor outlined in Kendrick’s findings is the performance of spot Bitcoin ETF purchases, which he stated have merely broken even since the U.S. elections. The implication here is that with many Bitcoins being purchased at higher prices, continued volatility might lead to panic selling among investors. “The risk is that forced or panic selling adds to the current macro-driven sell-off,” Kendrick noted, spotlighting the delicate balance that exists in the current market environment.
Long-Term Outlook Amidst Short-Term Volatility
Despite the short-term challenges, Kendrick remains optimistic about Bitcoin’s long-term potential, projecting a price target of $200,000 by the end of 2025. This aligns with the expectation of renewed institutional inflows as market conditions stabilize, particularly with the anticipated economic policies of the incoming Trump administration. Kendrick succinctly advised investors that “Discretion may be the better part of valour in digital assets over the next week or so,” highlighting the importance of strategy in navigating these turbulent times.
Conclusion
As Bitcoin hovers around $95,300, the focus on the pivotal $90,000 level remains critical for investors. Kendrick’s insights illuminate the potential risks of a significant price drop while reinforcing the longer-term bullish sentiment surrounding Bitcoin. With institutional interest likely to resurface, this could create new opportunities for recovery in the cryptocurrency markets in the coming years.
