Donald Trump’s Potential Return Could Boost Bitcoin: Standard Chartered
In a recent research report, Standard Chartered, a prominent investment bank, highlighted the growing risk of U.S. fiscal dominance and its potential impact on the cryptocurrency market.
The report suggests that the monetization of government debt by the Federal Reserve could drive investors towards alternative assets, such as cryptocurrencies.
Key points:
- U.S. fiscal dominance may lead to a steeper nominal 2-year/10-year curve.
- Bitcoin price has a positive correlation with these potential developments.
- A second Trump administration could be broadly positive for cryptocurrencies through a more supportive regulatory environment.
- Standard Chartered reiterates its Bitcoin price targets of $150,000 for year-end 2023 and $200,000 for year-end 2025.
According to Geoff Kendrick, a Standard Chartered analyst, the current economic landscape in the United States is increasingly prone to fiscal dominance, whereby the central bank’s monetary policy is influenced by the government’s fiscal needs.
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In such a scenario, Kendrick believes that Bitcoin (BTC) could serve as an effective hedge against de-dollarization and declining confidence in the U.S. Treasury market.
Donald Trump’s return could boost Bitcoin
The report further suggests that a potential second term for former U.S. President Donald Trump could be a boon for the cryptocurrency industry. Standard Chartered analysts anticipate that a Trump administration would foster a more supportive regulatory environment for digital assets.
In addition to the passive boost to Bitcoin’s value from de-dollarization, Standard Chartered expects a second Trump administration to actively support the cryptocurrency industry through looser regulations and the approval of U.S. spot ETFs.
The report also highlights the potential effects of U.S. fiscal dominance on the Treasury curve. Kendrick suggests that it would likely lead to a steeper nominal 2-year/10-year curve, a greater increase in break evens than real yields, and an increase in term premium.
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Interestingly, the analyst points out that the Bitcoin price has historically shown a positive correlation with these potential developments, indicating that the cryptocurrency could benefit from such economic shifts.
Despite the uncertain political landscape, Standard Chartered remains bullish on Bitcoin’s long-term prospects. The investment bank has reiterated its price targets for the leading cryptocurrency, forecasting a value of $150,000 by the end of 2023 and $200,000 by the end of 2025.
