Jeffrey Kendrick from Standard Chartered emphasized the primary function of Bitcoin as a tool for hedging risks in the financial system, supported by its decentralized ledger.
This protection manifests through two main channels: private sector risks, such as the collapse of Silicon Valley Bank in March 2023, and public sector risks, including those related to the U.S. Treasury.
Kendrick notes that outside of these risk periods, the trading model of Bitcoin often aligns with the model of the largest tech stocks, known as the "Magnificent Seven" (Mag7). Current concerns regarding the independence of the Federal Reserve, especially in light of the potential replacement of Jerome Powell, fall into the category of public sector risks.
The impact of these governmental risks can be measured through the term premium of U.S. Treasury bonds, which reached a 12-year high for the 10-year premium. Since the beginning of 2024, the correlation between Bitcoin and the term premium has been particularly strong.
Recently, Bitcoin has not kept pace with the rise in the term premium, a lag that Kendrick attributes to the previous narrative that rates would negatively affect tech stocks, and Bitcoin tends to mirror their dynamics. However, Kendrick believes that as long as issues related to the independence of the Fed persist, Bitcoin is likely to continue its upward trend, potentially reaching new historical highs.
Confirming his forecasts for Bitcoin, Kendrick maintains a target level of $200,000 by the end of 2025 and $500,000 by the end of 2028. He emphasizes that the dominant narratives surrounding Bitcoin change over time, and the cryptocurrency plays multiple roles in investment portfolios.
