Bitcoin Dips Below $60K: Deeper Declines on the Horizon?

Bitcoin’s recent fall below the $60,000 threshold could signal more challenges ahead, suggests Standard Chartered Bank. According to Geoffrey Kendrick, the head of the bank’s forex and digital assets research, this downturn opens the path for Bitcoin’s price to potentially drop to the $50-52K range.

Kendrick shared his insights in a recent statement, citing a mix of crypto-specific issues and broader macroeconomic factors as the main drivers behind this trend. Notably, there have been five consecutive days of outflows from U.S. spot Bitcoin exchange-traded funds (ETFs), alongside a tepid response to new spot Bitcoin and Ether ETFs launched in Hong Kong.

The poor performance of these Hong Kong spot ETFs, characterized by low trading volumes, has also played a part in Bitcoin’s recent price decline. Meanwhile, U.S. spot Bitcoin ETFs are seeing an average purchase price below $58,000, which heightens the risk of liquidation. Kendrick highlighted that over half of these ETF positions are now underwater, increasing the potential for further liquidations.

On the macroeconomic front, Kendrick pointed to rapidly deteriorating liquidity conditions in the U.S. since mid-April. Assets like cryptocurrencies, which typically thrive in liquid environments, are feeling the brunt of these tighter conditions. This scenario is exacerbated by strong U.S. inflation data and reduced expectations for Federal Reserve rate cuts.

Despite these challenges, Kendrick remains optimistic about Bitcoin’s long-term prospects. Last month, Standard Chartered raised its end-of-2024 Bitcoin price prediction from $100,000 to $150,000, with the potential to reach as high as $250,000 in 2025. This optimism is contingent on continued strong inflows into spot Bitcoin ETFs and potential purchases by forex reserve managers.

“Re-enter BTC in the $50-52k range or if US CPI on the 15th is favourable,” advises Kendrick, suggesting a strategic entry point for investors. He also hinted at a possible surge in Bitcoin prices towards the end of the year, particularly if the political landscape aligns with a Trump election victory, stating, “It may take a little while now. But I think when we get closer to Trump election victory we can rally hard from say Sept. to year-end.”

While the immediate outlook for Bitcoin may appear bearish, underlying factors and strategic opportunities suggest the potential for significant rebounds in the medium to long term.