Geoff Kendrick, Global Head of Digital Assets Research at Standard Chartered Bank, warned that if Bitcoin breaks the critical $90,000 support level, the price of Bitcoin could drop significantly.$BTC
Kendrick emphasized the risks associated with 'convexity risk'* as a spot Bitcoin ETF is likely to be forced to sell. According to him, this could temporarily push Bitcoin's price down to $80,000.
“We believe that if Bitcoin breaks below the $90,000 level, the market could decline another 10% in the short term, bringing prices down to the $80,000 range. The prices of other cryptocurrencies may fall in line with this trend. However, when the correction period ends, we advise investors to consider accumulating long positions when signs of price stabilization and recovery appear,” Kendrick said.
Currently, the trading price of Bitcoin is approximately $97,500, having risen 2.5% in the past 24 hours after dropping to $94,700.
Pressure from Bitcoin ETFs and macro factors
Kendrick pointed out that “since the US elections, Bitcoin purchased through spot ETFs has only just broken even. The risk is that forced selling or panic sentiment may increase selling pressure, which has already been affected by macro factors.” He also noted, “The $90,000 level is a milestone for Bitcoin, and if broken, it could trigger a deeper correction of more than 10% across the entire market, affecting the prices of many other cryptocurrencies.
Additionally, Kendrick highlighted the impact of the macroeconomic environment on the market.
“The cryptocurrency market is currently undergoing a macro sell-off that began with Federal Reserve Chairman Jerome Powell's hawkish stance on December 18,” he explained. “Bitcoin fell to around $90,000 on January 13, and the risk is that this sell-off could self-amplify, leading to a massive sell-off across the entire market. If this happens, it would put significant pressure on the prices of other cryptocurrencies, resulting in a deeper correction in the short term.
“Most recent Bitcoin sales have reduced losses, and the pressure to reassess market value is increasing.”
Despite recognizing short-term risks, Kendrick remains optimistic about the long-term prospects of Bitcoin.
“Caution may be the right choice for the market over the next week,” he suggested, adding that Standard Chartered Bank will still maintain a Bitcoin target of $200,000 by the end of 2025. He predicts that under the leadership of the Trump administration, capital flows from large institutions will return, creating strong long-term momentum for the market.
Convexity risk is a concept in finance, especially related to financial instruments such as bonds, options, and other derivatives. It involves the non-linear change in asset value when fundamental factors such as interest rates or the value of the underlying asset change.
Disclaimer: This article is for reference only and is not investment advice.
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