As a seasoned analyst with over two decades of experience navigating financial markets, I find myself intrigued by Geoff Kendrick’s latest prediction for Bitcoin. His perspective, rooted in a deep understanding of both traditional and digital assets, offers valuable insights into the interplay between these two worlds.
Geoff Kendrick, a researcher specializing in digital assets at a large international bank based in the UK, anticipates that Bitcoin could experience a further decrease, possibly reaching a minimum of $88,700 in the near future. This prediction is due to the impact of U.S. President-elect Donald Trump’s selection for Treasury Secretary, investment manager Scott Bessent, on the market.
The Treasury Connection
Kendrick believes the sudden drop in Bitcoin is due to a decrease in U.S. Treasury term premium following Bessent’s announcement. After Bessent was appointed, U.S. Treasuries have seen a rise, causing yields on five- to 30-year maturities to fall by over 10 basis points.
As a proponent of fiscal conservatism, Bessent is generally anticipated to introduce policies aimed at strengthening established financial systems. His standing, combined with Trump’s pledges of deregulation and tax reductions, has provided comfort to investors—for the time being—refocusing interest towards conventional investments such as Treasuries.
The potential exists for Bitcoin’s surge to decelerate momentarily, according to Kendrick. This could happen because one of its main purposes is as a safeguard against problems in conventional finance, such as banking sector instability or questionable government financial policies. With the strengthening of Treasury markets, the allure of Bitcoin as a secure investment might temporarily diminish.
The Inflation Hedge Narrative
For quite some time, Bitcoin has been promoted as a safeguard against inflation and questionable monetary policies by governments. During Trump’s presidential campaign, his tough stance on tariffs sparked concerns about rising inflation, which usually diminishes the attractiveness of U.S. Treasuries. However, with Bessent predicted to pursue a more balanced fiscal strategy, anxiety over inflation has lessened, causing a recovery in Treasuries and lowering Bitcoin’s immediate appeal.
On November 5, Donald Trump’s unexpected victory ignited a significant Bitcoin surge, propelling prices from around $70,000 on election night to an unprecedented peak of $99,645 in a matter of days. Investors looked forward to a pro-crypto administration, with expectations of regulatory changes and endorsement for digital assets fueling market optimism. However, the upward trend halted just short of $100,000, leading to this week’s dramatic price drop.
Despite the short-term headwinds, Kendrick remains bullish on Bitcoin’s long-term potential. He forecasts that Bitcoin could rebound to $125,000 by the end of 2024 and reach a staggering $200,000 by the end of 2025 as broader adoption and regulatory clarity drive the market forward.
Kendrick remarked, “Bitcoin still has potential for expansion,” pointing out that its underlying strengths persist even amid fluctuations in investor opinions.
Broader Implications for the Market
The relationship between Bitcoin and conventional financial markets underscores the expanding intricacy of the digital currency landscape. As Bitcoin becomes more entwined within global finance, its value tends to be affected by traditional market factors like bond yields and political decisions made by governments.
The close call at $100,000 highlights the cryptocurrency’s volatile nature and the uncertainty surrounding its price fluctuations. Yet, it also suggests the asset’s durability and increasing significance within the investment portfolios of individual and institutional investors.
The price surge of Bitcoin towards $100,000 might have experienced a temporary downturn, but its tale is far from complete. As the market grapples with the impact of a Trump presidency and a conservative Secretary of the Treasury, Bitcoin’s role as both a safeguard against inflation and an investment for growth could be re-examined. The next few weeks might challenge the conviction of Bitcoin investors, but experts at Standard Chartered believe its overall trend will continue to climb upwards in the long run.
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2024-11-27 12:04