If US defaults on debt, Bitcoin could rise by almost 70%, says Standard Chartered analyst
Bitcoin bulls have had a relatively good year so far after a disastrous 2022. getty
Bitcoin bulls have had a good year so far. If the US defaults on its debt, it could get even better, at least as far as its Bitcoin investment is concerned.
So says Geoff Kendrick, Standard Chartered’s head of digital asset research. He told Insider this week that a US default – which he called a “low probability, high impact event” – could send Bitcoin jumping by around $20,000, a nearly 70% increase from today’s levels.
Bitcoin started the year well below $17,000, but is now hovering near $30,000. It’s still a long way from its all-time high of nearly $69,000 in November 2021, and some investors who bought Bitcoin around then are no doubt still licking their wounds.
Bitcoin, Kendrick predicted, would do well even if mainstream cryptocurrencies, which trade more like stocks, did not. “So actually the optimal trade would probably be long Bitcoin, short Ethereum. A mix like that would probably be a good expression of that,” Kendrick told Insider.
On Monday, Kendrick said in a note that Bitcoin could reach $100,000 by the end of 2024 and that the “crypto winter” was over. He added that Bitcoin has benefited from its status as a “branded safe haven, a perceived relative store of value and a means of money transfer.”
Bitcoin’s price soared earlier this year after Silicon Valley Bank collapsed and fears of a banking crisis rose.
Meanwhile, the debt ceiling crisis has intensified. On Wednesday, House Republicans (barely) passed legislation that would raise the government’s debt ceiling in exchange for spending restrictions. In the weeks ahead, they will try to reach a compromise with President Joe Biden that would allow the nation’s debt to be lifted.
If the US defaulted on its debt this summer, the consequences would be dire for America and the world. Last month, Treasury Secretary Janet Yellen warned lawmakers that “a default on our debt would trigger an economic and financial disaster.”
Few believe it will come to that.
But even without a US standard, many Bitcoin bulls see good things ahead. ARK Invest CEO Cathie Wood said in February that in five years Bitcoin will reach “about $670,000, something like that, and then by 2030, as we see more use cases and more of these insurances that are written against tax and policy regimes that are not healthy, we think it could pass $1 million.”
Bitcoin has many critics and doubters, of course. Mark Mobius, the billionaire founder of Mobius Capital Partners, predicted in December that Bitcoin would fall to $10,000 at some point this year. He has said of Bitcoin, “It’s not an investment, it’s a religion.”
Earlier this month, Berkshire Hathaway CEO Warren Buffett reiterated his longstanding skepticism. “Something like Bitcoin, it’s a gambling token and it has no intrinsic value,” he told CNBC’s Squawk Box. “But that doesn’t stop people from wanting to play the roulette wheel.”
