Geoff Kendrick, the Chief Currency Strategist at Standard Chartered, has made a bold prediction: Bitcoin could soar to an impressive $250,000 by 2025. This eye-catching forecast is based on several key factors that are shaping the cryptocurrency landscape.
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The Role of ETF Inflows
Exchange-traded funds (ETFs) have been a game-changer for the crypto market. Kendrick emphasizes that if ETF-related inflows materialize as expected, Bitcoin’s trajectory could be nothing short of remarkable. These investment vehicles allow a broader range of investors to participate in crypto, potentially injecting significant capital.
To put this into perspective, Kendrick draws parallels with the gold market. When the SPDR Gold Trust (GLD) ETF was introduced in 2004, it facilitated substantial inflows into the gold sector. Adjusting for relative market caps, Kendrick estimates that Bitcoin could see inflows of $34 billion if ETFs follow a similar path.
Reserve Managers and the Appeal of Non-Standard Assets
Another critical factor is the growing interest from reserve managers. These institutional players oversee foreign exchange reserves (FX reserves) for central banks. Kendrick points out that geopolitical tensions and sanctions have increased the appeal of non-standard reserve assets. While gold and the Chinese yuan (CNY) have traditionally benefited, digital assets like Bitcoin could also find favour.
“We think US and EU sanctions on Russia’s reserves have structurally increased the appeal of non-standard reserve assets for FX reserve managers,” Kendrick explains. “If they do, we would expect the largest and most liquid assets – such as Bitcoin – to receive most of the inflows.”
Bitcoin Halving and Portfolio Optimization
April’s Bitcoin halving event is another catalyst. This recurring phenomenon reduces the number of new Bitcoins awarded to miners. Kendrick believes that the combination of ETF inflows and the halving effect could propel Bitcoin to new heights.
Moreover, Kendrick’s analysis includes a gold-to-Bitcoin portfolio optimization. As the digital gold narrative gains traction, investors may allocate some of their portfolios to Bitcoin as a hedge against inflation and currency devaluation.
Revised Price Targets
Kendrick’s original prediction for Bitcoin in 2025 was $200,000. However, given the surge in prices so far this year, he now expects Bitcoin to reach $150,000 by the end of 2024. The approval of spot ETFs earlier this year triggered a rally, and Kendrick believes that net inflows will continue to drive the market.