Bitcoin may be just days away from its next historical high.
Standard Chartered analyst Geoff Kendrick stated that the world's largest cryptocurrency seems poised to exceed its record of around $109,000 next week, with prices possibly reaching up to $130,000 between February and March.
After Trump's inauguration, cryptocurrency prices experienced fluctuations, with investors hoping for a series of cryptocurrency-friendly announcements on that day. Overly bullish market sentiment prompted Kendrick to warn that a correction was imminent. Although Trump indeed signed an executive order on cryptocurrency last week, Kendrick believes it did not meet industry expectations.
However, the head of global digital asset research at Standard Chartered Bank stated that with the order now in place and the Federal Reserve keeping interest rates stable, the uncertainty that had brought resistance to the cryptocurrency rally has dissipated.
Even the significant drop in the stock market on Monday provided a glimmer of hope for bitcoin, clearing the way for its price increase. Following the announcement of a new cost-effective artificial intelligence (AI) tool by a Chinese startup, U.S. tech stocks plummeted. This sell-off led to the liquidation of $1.1 billion in long positions in bitcoin futures, but the cryptocurrency market largely withstood the selling pressure.
“Therefore, market positioning is clearer, and in any case, if lower-cost AI tools (marginally) reduce inflation, then risk assets unrelated to AI, such as bitcoin, should benefit.” he said.
As risks temporarily recede, bitcoin's momentum seems to be strengthening once again.
Although Trump's order may disappoint those who have long hoped he would announce the establishment of a national bitcoin reserve, other countries may be taking the lead.
According to a report by the Financial Times, if the plan proposed by Czech Central Bank Governor Aleš Michl is approved on Thursday, the Czech central bank may eventually exchange 5% of its €140 billion foreign exchange reserves into bitcoin.
“At current prices, the Czech central bank would hold 69,000 bitcoins. The country known to hold the most bitcoins is El Salvador, which holds 6,049,” Kendrick calculated.
He added that the Swiss central bank also seems to be moving towards embracing bitcoin, as activists in Switzerland are collecting signatures to call for a vote on the issue. Kendrick stated that this could take some time, but the initiative is significant—Switzerland's foreign exchange reserves are six times those of the Czech Republic.
Optimistic cryptocurrency players predict that establishing a bitcoin reserve in the U.S. will trigger other countries to set up their own bitcoin reserves, significantly boosting bitcoin's price. Although Trump has yet to take action, his order has indeed created space for establishing a 'reserve,' which means the U.S. could retain the 207,000 bitcoins it already holds.
Meanwhile, the U.S. Securities and Exchange Commission (SEC) has rescinded Staff Accounting Bulletin 121 (SAB 121), which will boost institutional demand for digital assets. This unpopular rule effectively prevented U.S. lenders from acting as cryptocurrency custodians.
Institutional purchases are seen as a potential driving force behind Kendrick's optimistic outlook for bitcoin. The analyst believes that bitcoin's year-end target price is $200,000.
Article reposted from: Jin Shi Data
