BlockBeats news, on November 27, Standard Chartered's Global Digital Assets Research Head, Geoff Kendrick, pointed out that Bitcoin's recent correction is influenced by several factors, including changes in the U.S. Treasury market and the upcoming monthly options expiration.
Kendrick attributed the recent market turbulence (including the drop in Bitcoin and the rebound of long-term U.S. Treasuries) to the reduction of the term premium in U.S. Treasuries. The term premium is the additional return that investors require for holding long-term bonds compared to continuously rolling short-term bonds.
Standard Chartered analysts stated that since Bitcoin is often seen as a hedge against the instability of traditional financial markets, the increased confidence in U.S. Treasury securities may reduce Bitcoin's appeal in the short term, leading to a price drop.
"This is important for Bitcoin because one of its core uses is to hedge against issues in traditional financial markets, especially those related to banking or U.S. Treasury securities," Kendrick stated in a report on Tuesday. "Therefore, a lower term premium will pressure Bitcoin, at least temporarily."
Nevertheless, he remains optimistic about Bitcoin's long-term outlook. Kendrick reiterated his year-end target for Bitcoin at $125,000 and predicts that by the end of 2025, the Bitcoin price will further grow to $200,000.
Kendrick noted that according to Deribit data, there are a total of 18,000 Bitcoins in open interest for options with strike prices between $85,000 and $100,000, which may limit price volatility before the options expiration. "This usually means that as the options expiration approaches, prices tend to stagnate," Kendrick said.
However, he noted that despite the correction in Bitcoin, the demand from institutional investors remains strong. Kendrick pointed out that since the beginning of this month following the U.S. elections, spot Bitcoin ETFs have accumulated purchases of about 77,000 Bitcoins, while MicroStrategy (MSTR) has additionally purchased 134,000 Bitcoins.
"There are no signs of MicroStrategy's purchases slowing down, and they are unlikely to sell, but since the U.S. elections, the average purchase price for spot ETFs and MicroStrategy is $88,700," Kendrick stated. "This could become a short-term support level, with Bitcoin possibly consolidating between $85,000 and $88,700 before resuming its upward trajectory." (The Block)
