Bitcoin Rally Could Slow in the Short Term as Investors Shift Focus Back to Traditional Assets, Researcher Predicts

Geoff Kendrick, a digital assets researcher at the British multinational bank, predicts Bitcoin could drop further, potentially bottoming out at $88,700 in the short term.

A recent analysis by Standard Chartered suggests that Bitcoin’s price could drop further in the short term, potentially bottoming out at $88,700, following a sharp reversal from its record highs.

According to Geoff Kendrick, a digital assets researcher at the British multinational bank, the U.S. President-elect Donald Trump’s pick for Treasury Secretary has played a role in this price decline.

As a hedge fund manager, Scott Bessent's appointment has led to a rally in U.S. Treasuries, with yields on five- to 30-year maturities dropping by more than 10 basis points.

Kendrick attributes this to a "post-Bessent announcement reduction in U.S. Treasury term premium."

As a fiscal conservative, Bessent is expected to implement policies that stabilize traditional financial markets.

His appointment, along with Trump’s promises of deregulation and tax cuts, has shifted investors' focus toward traditional assets like Treasuries.

"Bitcoin’s rally could slow in the short term," wrote Kendrick, "because one of its core uses is as a hedge against traditional finance issues, like banking sector instability or government fiscal policy."

With Treasury markets rallying, Bitcoin’s appeal as a safe-haven asset may wane temporarily.

Throughout Trump’s campaign, his stance on tariffs raised concerns about higher inflation, which typically dampens the demand for U.S. Treasuries.

However, with Bessent expected to steer a more measured fiscal approach, inflation fears have eased, leading to a rebound in Treasuries and reducing Bitcoin’s immediate appeal.

After Trump's surprise victory on November 5, Bitcoin experienced a massive rally, surging from below $70,000 on election night to an all-time high of $99,645 within days.

Investors anticipated a crypto-friendly administration, with promises of regulatory reform and support for digital assets further boosting market sentiment.

However, the rally encountered resistance just shy of $100,000, triggering this week's sharp reversal.

Despite the short-term headwinds, Kendrick maintains a bullish outlook on Bitcoin's long-term potential.

He projects that the cryptocurrency could rebound to $125,000 by the end of 2024 and reach a remarkable $200,000 by the end of 2025, driven by broader adoption and regulatory clarity.

"Bitcoin has room to grow," wrote Kendrick, highlighting the cryptocurrency's strong fundamentals despite temporary shifts in investor sentiment.

The interplay between Bitcoin and traditional markets showcases the increasing complexity of the cryptocurrency ecosystem.

With Bitcoin now deeply integrated into broader financial systems, its price is heavily influenced by traditional market dynamics, such as Treasury yields and government appointments.

The near-miss at $100,000 during this recent rally underscores the volatility of cryptocurrency and the unpredictability of its price movements.

At the same time, it also signals the resilience of the asset and its growing role in the portfolios of both retail and institutional investors.

Bitcoin's brush with the six-figure milestone may have ended in a short-term setback, but the narrative surrounding the world's largest cryptocurrency is far from reaching its conclusion.

As the market continues to digest the implications of a Trump presidency and a conservative Treasury Secretary, Bitcoin's status as a hedge and a growth asset will likely come under renewed scrutiny.

While the coming weeks may test the resolve of Bitcoin investors, the long-term trajectory, at least according to Standard Chartered, remains pointed upward.