Geoff Kendrick of Standard Chartered, having made a bull case for Bitcoin (BTC) to hit US$200,000 ($270,153) by end of this year, has now further expanded on his thesis to predict that the most famous cryptocurrency will reach US$500,000 by end of 2028, when Donald Trump, widely seen as a supporter of digital currency ends his sequel term.
As at 12.30pm Singapore time, Bitcoin changed hands at US$97,712.14, up 126.8% over the past 12 months.
Access for investors to Bitcoin increased greatly back in January 2024 with the introduction of spot exchange-traded funds (ETFs) in the US, says Kendrick, the bank’s head of FX research, west and digital assets research in his Feb 5 note.
ETFs so far have attracted a net US$39 billion which supports the thesis that much pent-up demand is unleashed with increased investor access.
This access has recently been further enhanced with the Trump administration repealing the US Securities and Trade Commissions' guideline SAB-121, that requires companies to recognise digital assets as liabilities on balance sheets, he adds.
In addition, the Jan 23 order by Trump to evaluate a potential national digital asset stockpile has opened up the consideration for central banks to dive into Bitcoin assets. As such Kendrick believes that along with ETF market maturity, the volatility of Bitcoin will be reduced.
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Reinforcing this notion, Kendrick observes that several central banks such as the Czech National Bank (CNB) and the Swiss National Bank (SNB) have been evaluating the idea of putting a portion of their reserves into Bitcoin. The Czechs are reportedly considering investing as much as 5% of their EUR140 billion ($196.45 billion) of reserves into Bitcoin.
Furthermore, with the ETF market maturing, volatility will be brought down further. He has also maintained his premise that gold can be used as a proxy to evaluate the direction in which Bitcoin prices are headed. “Investor access and lower volatility should lead to price appreciation longer-term as portfolios continue to move towards their optimal, or logical state,” reasons Kendrick.
Lower volatility and increased investor access have been key indicators in Kendrick’s predictions for Bitcoin’s future, which should result in “price appreciation in the longer-term” and a higher share for Bitcoin in an optimised two-asset portfolio with gold, he adds.
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Compared to TradFi, BTC centres around decentralised finance (DeFi) and provides a unique hedge against issues facing TradFi, with decreasing inflation rates (now 0.8% y-o-y) in comparison to US M2 growth (now at 3.9%). Along with this, Kendrick also believes that BTC has high enough liquidity and good access exposure to blockchain technologies to support the fact that BTC is here to stay.
Standard Chartered holds reasonable optimism that the volatility of BTC is bound to fall over the next 2 to 3 years, with decreasing volatility rates observed prior to the markets anticipating the January 2024 ETF launch, showing it is possible.
Standard Chartered’s linear extrapolation of the correlation of Bitcoin volatility to Bitcoin prices expects the price level in the next three years to hit US$500,000 if the 3M ATM Bitcoin volatility falls from its current spot of 55% to 45% as predicted.
