Standard Chartered Expects Bitcoin Correction to Range from $69,000 to $76,500, Offering Buying Opportunity
The global head of digital asset research at Standard Chartered, Geoffrey Kendrick, predicts that Bitcoin will experience a new correction over the weekend. He foresees a drop in the flagship cryptocurrency within a range of $69,000 to $76,500 by Monday. Kendrick sees this as a buying opportunity, stating, ‘Now that is a dip I would like to buy.’
After briefly falling below $79,000, Bitcoin is currently trading around $84,000, raising questions about the possible end of this downward movement. However, Kendrick expects further massive outflows from Bitcoin ETFs, following the $1 billion in redemptions recorded on Tuesday.
Bitcoin ETFs Under Pressure
Since the US presidential election in November, net flows into Bitcoin ETFs have declined by $2.5 billion around the $80,000 threshold. This trend reflects a decrease in institutional demand as the market tries to digest increased volatility.
The relevance of these ETF outflows is debated, with some arguing that they are market-neutral as they mainly result from the closure of carry trades. These strategies involve buying Bitcoin at a low price, holding it through an ETF, and then selling it at a higher price, often with hedges in place. Kendrick contests this view and emphasizes that these carry trades are not significant enough to justify the observed withdrawals.
On the other hand, he highlights a more concerning factor: hedge funds are increasing their short positions on Bitcoin, which could amplify the selling pressure.
Increase in Hedge Funds’ Short Positions
Data from the CFTC shows that hedge funds’ short positions have surged from $7.9 billion to $11.3 billion since the November election. During the same period, ETF exposure rose from $23.5 billion to $40.2 billion before dropping to $37 billion.
The evolution of these positions is crucial for Bitcoin’s trajectory. Kendrick suggests that ETF investors are mostly long, exposing them to the risk of panic selling if Bitcoin continues to decline. He warns, ‘If these flows mainly come from retail investors, they are vulnerable to panic sales.’
The release of today’s new CFTC data is expected to provide crucial insights into the development of these positions.
A Similar Scenario to August 2024?
Uncertainty prevails over the immediate future of risky assets, and Kendrick questions their ability to bounce back. The recent announcement of tariff rates by Donald Trump has already been integrated into the market, making it difficult to anticipate an immediate rally.
Kendrick draws a parallel with August 2024, a period in which Bitcoin dropped from $70,000 to $50,000 in one week. If the current trend follows this pattern, a further 5.5% drop from current levels would place Bitcoin precisely within the range of $69,000 to $76,500 – a threshold that Kendrick sees as a favorable buying opportunity.
