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Standard Chartered sees Bitcoin as hedge against US fiscal risks.
The prospect of Donald Trump returning to office after the US presidential election in November could be a positive catalyst for Bitcoin’s value, said Standard Chartered in a report on Tuesday. The bank suggests a Trump election victory could lead to a more crypto-friendly regulatory landscape.
“We think that a second Trump administration would be broadly positive via a more supportive regulatory environment,” the report stated.
Additionally, Standard Chartered believes the risk of the US government printing money to pay its debts is increasing. This could weaken the US dollar, and in this scenario, Bitcoin could act as a hedge against de-dollarization and waning confidence in the US Treasury market.
“In a scenario of U.S. fiscal dominance, we think bitcoin (BTC) would provide a good hedge against de-dollarization and declining confidence in the U.S. Treasury market,” analyst Geoff Kendrick noted.
Kendrick added that Bitcoin could benefit from three potential outcomes of US fiscal dominance: “a steeper nominal 2-year/10-year Treasury curve, a larger rise in breakevens than real yields, and an increase in the term premium.”
In other words, inflation expectations would rise faster than actual interest rates due to concerns about increased government spending. Investors worried about inflation and the value of the US dollar might seek alternative assets like Bitcoin.
Kendrick suggested a Trump re-election could lead to faster selling of US Treasury bonds by foreign investors due to concerns about US government finances.
“In addition to the passive boost to BTC from de-dollarization, we would expect a second Trump administration to be actively supportive of BTC (and digital assets more broadly) via looser regulation and the approval of U.S. spot ETFs,” the report stated.
Regarding Bitcoin’s price targets, the bank maintains its prediction that Bitcoin will reach $150,000 by the end of 2024 and $200,000 by the end of 2025.
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