The demise of Silicon Valley Bank and other mid-tier U.S. lenders has strengthened the argument that bitcoin is a decentralized, trustless, and scarce digital asset, according to Standard Chartered analyst Geoff Kendrick in the note.
According to Kendrick in the study titled “Bitcoin — Pathway to the USD 100,000 level,” they believe the much-touted “crypto winter” is finally passed and see potential for Bitcoin (BTC) to reach the USD 100,000 level by the end of 2024.
The current strain in the traditional banking industry greatly favours BTC outperformance and supports the idea of Bitcoin as a decentralized, trustworthy, and scarce digital asset, according to Kendrick.
Given these benefits, they predict that BTC’s market cap share of all digital assets might increase to between 50% and 60% in the next months from its present level of 45%.
As of 9:40 a.m. ET, data showed that the price of bitcoin was $27,601.55.
According to Kendrick, bitcoin has profited from the struggles of Circle’s USD Coin and other so-called stablecoins that try to achieve a 1-to-1 peg to the US dollar.
Following the disclosure of SVB exposure by its issuer Circle, USDC lost its peg to the dollar. The coin has subsequently recovered its $1 worth, but data shows that since March 10 when the bank was put into receivership by the US government, its overall market value has decreased from more than $43 billion to $30.7 billion.
The route to the USD 100,000 mark is becoming more obvious as a result of this, as well as the stabilisation of risk assets and expectations that the Federal Reserve would moderate monetary tightening further, according to Kendrick.
Bitcoin proponents contend that, during hard times, the digital money is a valuable asset to diversify into. According to the hypothesis, since there are only 21 million bitcoins available, the price of bitcoin should rise as interest in alternative assets rises in order to counteract the impacts of rapid inflation.
The cryptocurrency fell short of that benchmark last year when it fell 65%, making it the second-worst year for bitcoin ever against a turbulent backdrop of multibillion-dollar failures like FTX and Terra and governmental crackdowns.
But more recently, the token has been rising, which may mean a recovery is imminent. Although it has dropped precipitously since breaking the $30,000 barrier two weeks ago, Bitcoin is up 66% since the year began.
The profitability of Bitcoin mining companies has significantly increased as a result of the accompanying price jump, which went from below USD 20,000 prior to the SVB troubles to above USD 30,000, Kendrick said.
Bitcoin miners are unpaid individuals who devote their computational resources to resolving difficult cryptographic puzzles in order to validate transactions and create fresh currency.
Bitcoin miners are unpaid individuals who devote their computational resources to resolving difficult cryptographic puzzles in order to validate transactions and create fresh currency.
Kendrick noted that this would be a good development for the cryptocurrency since miners are a big driving factor for the market given the extent of their holdings and that the price of BTC is already well over our USD 15,000 estimate of direct costs.
As the FOMC draws closer to the end of its cycle of tightening, the broader macroeconomic environment for risky assets is also gradually getting better. Although BTC can perform well when risky assets perform poorly, correlations to the Nasdaq suggest that it should perform better if risky assets perform better overall.
Bitcoin’s price outlook
Not just Standard Chartered expects bitcoin’s price to rise sharply. At a blockchain conference in Paris last month, a number of cryptocurrency industry insiders predicted that bitcoin would reach a new all-time high in 2023. One executive at the U.S.-based cryptocurrency exchange Gemini told that $100,000 might be a realistic price target.
Several venture capitalists, investors, and analysts were questioned last year about their predictions for how the digital currency will perform in 2023. On the bullish end of the scale, Tim Draper, the founder of Draper Associates and a well-known bitcoin bull, predicted that the cryptocurrency might hit $250,000.
In a list of market surprises for 2023, Standard Chartered ironically stated that the bitcoin might fall as low as $5,000.
As a potential cause for another massive increase in the price of the coin, some cryptocurrency speculators are pointing to anticipation of the upcoming so-called “halving” of bitcoin, which will cut the incentives to miners by 50%.
