There is currently a deadlock in the United States over raising borrowing limits, which has caused the global economy to have a strong focus on the possibility of a US default.
Market analysts are projecting that if such a default occurs, it could directly impact the value of Bitcoin (BTC). This is because the flagship cryptocurrency has established a correlation with the traditional finance sector.
According to Business Insider’s report on April 29, Standard Chartered’s Head of FX Research, Geoff Kendrick, thinks that if the $31.4 trillion federal debt ceiling is not raised by the estimated deadline of July and a default occurs, Bitcoin could surge by around $20K, printing the tape at $49,000 – a jump of nearly 70% from its current $29.700 level.
Kendrick notes that Bitcoin is known for performing well during stressful times and is considered a safe haven because of its decentralized nature.
At the same time, the analyst predicts that Bitcoin may experience some volatility and may not spike all the way to $49K. In fact, he expects a decline of approximately $5,000 before the top crypto by market cap starts to rise again. The analyst also emphasizes that unlike other cryptocurrencies, Bitcoin behaves more like a safe haven and is a good option for trading.
“So actually, the optimal trade would probably be long bitcoin, short ethereum. That sort of mix would probably be a good expression of this,” Kendrick said.
The analyst — who believes that BTC could hit $100K by the end of 2024, citing reasons that include banking issues, the halving of Bitcoin, and the likely end of Fed rate increases — further noted that the prospect of the US Congress not raising the debt ceiling is unlikely to occur but if it did, it could have significant consequences.
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