KEYTAKEAWAYS
- Continued Price Pressure: Standard Chartered predicts Bitcoin could drop to the $50,000 to $52,000 range, impacted by both crypto-specific trends and larger economic factors.
- Economic Policy Impact: Recent shifts in Federal Reserve policies and economic indicators suggest a prolonged period of higher interest rates, intensifying the challenges for the cryptocurrency market.
- Market Risks and Opportunities: U.S. Bitcoin spot ETF investors are facing significant liquidation risks with current price levels, while Ethereum shows resilience by surpassing Bitcoin in the transaction fee to market cap ratio.
CONTENT
In the Crypto Pre-drink, we serve up a daily shot of the hottest crypto news and market insights to fuel your investment decisions.
STANDARD CHARTERED: BITCOIN DECLINE CONTINUES
Standard Chartered’s analysis points to potential further declines in Bitcoin prices, possibly reaching as low as $50,000, after breaking the $60,000 barrier and hovering around $57,000. Geoffrey Kendrick, head of forex and digital assets at the bank, notes that the path towards the $50,000 to $52,000 range has been reopened, influenced by a combination of cryptocurrency-specific and broader macroeconomic factors.
THE FED FACTOR: ‘HIGHER FOR LONGER’ RATES WEIGH ON CRYPTO
Meanwhile, Nick Timiraos, often regarded as a spokesperson for the Fed, highlights a shift in the central bank’s stance. With disappointing inflation data over the past three months and robust wage growth last quarter, internal Fed discussions may intensify on how to manage the final stretch of reducing inflation.
BITCOIN’S DISMAL MONTH
In related news, Bitcoin has seen its worst monthly performance since the November 2022 collapse of Sam Bankman-Fried’s FTX empire, with prices plummeting nearly 16% in April. According to Chris Weston, research director at Pepperstone, the “higher for longer” interest rate outlook is putting strain on assets sensitive to rates, including cryptocurrencies, stocks, and bonds.
ETF INVESTORS FACE LIQUIDATION RISK
Additionally, the average buying price for holders of U.S. Bitcoin spot ETFs, as reported by 10x Research, is approximately $57,300, close to current Bitcoin levels. More than half of these positions are underwater, posing significant liquidation risks as funds continue to flow out of the U.S.
ETHEREUM OUTPACES BITCOIN IN KEY METRIC
Lastly, an intriguing development in the crypto space is the transaction fee to market cap ratio of Bitcoin dropping below that of Ethereum for the first time since July 2019, according to The Block.
With the Fed likely maintaining rates in its upcoming decision, and as labor market data looms, the impact on rate-sensitive assets like cryptocurrencies could be substantial.
