After moving above $30,000 for the first time in 10 months, bitcoin retreated, slumping more than 7% over the past week amid elevated regulatory fears.
Like any other security, bitcoin doesn’t move up in a straight line, and pullbacks like this are common during the cryptocurrency’s bull markets. Plus, bitcoin’s recent retrenchment isn’t prompting a spate of downward price revisions. Actually, the opposite is true.
On Monday, Standard Chartered said the largest cryptocurrency by market value could reach $100,000 by the end of next year. That’s more than tripe where bitcoin resides today.
“While sources of uncertainty remain, we think the pathway to the USD 100,000 level is becoming clearer,” wrote Standard Chartered’s head of digital assets research, Geoff Kendrick, in a report.
He added that the crypto winter that set in last year is over; while bitcoin is higher by 66% this year, there’s runway for more upside and broader adoption.
“The current stress in the traditional banking sector is highly conducive to BTC outperformance – and validates the original premise for Bitcoin as a decentralised, trustless and scarce digital asset,” he noted in the report. “Given these advantages, we think BTC’s share of total digital assets market cap could move into the 50-60% range in the next few months (from around 45% currently).”
Kendrick also pointed out that bitcoin’s rise is also helping miners. While that’s predictable owing to the fact that miners are among the companies most correlated to bitcoin prices, this year’s resurgence by the group is nonetheless important because it eases some of the strain incurred during the crypto winter of 2022. Additionally, it’s allowing some miners to replenish holdings at somewhat favorable pricing.
“The associated price jump – from below USD 20,000 before the SVB issues to above USD 30,000 – has dramatically increased the profitability of Bitcoin mining companies,” according to the Standard Chartered strategist. “With the price of BTC now well above our USD 15,000 estimate of direct costs, miners are unlikely to sell many coins.”
As for the $100,000 estimate, eye-popping forecasts for bitcoin prices are common, and whether or not six figures come into play remains to be seen. Over the near-term, crypto assets could be supported by indications that the Federal Reserve is preparing to hold off interest rate increases in the back half of this year. More clarity on that issue will arrive following next week’s Fed meeting.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.