Bitcoin is rediscovering its mojo as banks stumble, says Standard Chartered’s Geoff Kendrick
In the first part of a three-part interview series, Geoff Kendrick, head of crypto research at Standard Chartered Bank, lays out the roadmap for rapid Bitcoin gains over the next 12 to 18 months.
It was a prediction at the end of April that sent pulses racing across the digital asset market. Bitcoin, Kendrick said, could reach the US$100,000 mark by the end of 2024.
Kendrick was among the first of a number of analysts to publicly predict a rapid rise in the price of crypto’s most dominant asset. The “crypto winter” of 2022 had come to an end, he said, with Bitcoin representing a “safe haven” from the fallout from a series of bank failures in the US that forced Swiss investment banking giant Credit Suisse into a shotgun merger. with rival UBS Group.
In an exclusive interview with Forkast’s Jenny Ortiz-Bolivar, Kendrick elaborates on his medium-term projections for Bitcoin, and outlines why he and other digital asset analysts are bullish on “digital gold.”
Questions and answers have been edited for clarity and length.
Jenny Ortiz-Bolivar: How does the turmoil in the traditional financial sector affect the digital asset class in the short and long term?
Geoff Kendrick: When Satoshi first introduced Bitcoin in 2008, it came right after the global financial crisis. At that time the banks were suffering and there was a need for a trustless liquid asset that was peer-to-peer and did not require any intermediaries. It therefore makes a lot of sense that Bitcoin has now started to rise again on the back of concerns in the banking sector.
Bitcoin’s core usage links back to issues in the TradFi sector, which I expect will continue to drive investor confidence in Bitcoin. Investors who had either ignored or missed crypto assets entering 2023 are now going to re-engage with the asset class and Bitcoin in particular.
Ortiz-Bolivar: So for you, will Bitcoin continue to hold its position as so-called “digital gold?”
Kendrick: It all links back to the issue of concerns within the TradFi sector. We’ve seen Bitcoin correlate closely with gold over the past six months or so, and it makes sense that the price of both is heading higher given these concerns. However, the big difference between Bitcoin and gold is that crypto assets remain unregulated. For institutional money – which is still heavily invested in the gold space as a hedge against problems in the traditional financial system – to enter the crypto space, we need to see that regulation.
If that happens, Bitcoin should start to increase its share of the Bitcoin and gold mix, which in turn will lead to lower volatility. So what is starting to emerge is a positive cycle of medium term regulation, institutional money and lower volatility.
Ortiz-Bolivar: In April, you said you see Bitcoin rising to the USD 100,000 mark by the end of 2024. In the shorter term, where do you see Bitcoin heading during 2023?
Kendrick: Before the collapse of Silicon Valley Bank in March, Bitcoin was trading at USD 20,000. Increasing concerns about the TradFi sector then took us up to USD 30,000. Taking into account Bitcoin dominance and an increase in the share of total crypto assets, we are likely to increase another ten, which takes us to around $40,000. On top of that, concerns that Bitcoin miners may start selling coins and liquidating their positions will now subside, adding another $10,000 or so.
From there, at a position of around $50,000, everything starts to depend on the actions of the Fed. We think their rate hikes will end this month or next. As they finish, broader risk assets will also start to outperform. Then there is the Nasdaq, where crypto basically correlates as an extension of the tech sector. If the technology starts to catch on as well, we can expect to see another ten added, taking the price of Bitcoin up to $60,000 by the end of 2023.
Ortiz-Bolivar: You mentioned Bitcoin dominance over altcoins, which currently account for around 46% of the total market share. How do you see the situation developing?
Kendrick: Again, we see a recent rally based on Bitcoin’s use case and the link to issues in TradFi. The desire for a liquid asset in the crypto space means that Bitcoin’s dominance is likely to increase in the future. We have already seen an increase from around 40% to 45% and I think we can continue to 55% or 60%. That level of dominance is likely to continue throughout the year and into next year.
The next halving will take place in April 2024, so around twelve months from now. Beyond that, the typical cycle says Bitcoin dominance will likely then peak around the 60% level, perhaps during the second half of 2024. Then you’ll likely see the other altcoins come back into their own as the broader crypto space improves again .
