Bitcoin’s Decline Below $60,000: A Buyer’s Opportunity
According to Standard Chartered, Bitcoin’s (BTC) recent drop below the $60,000 mark is seen as a “normal” adjustment, presenting a favorable buying opportunity. This insight was shared in an investor note on October 3, 2023.
Geopolitical Influences on Bitcoin Prices
Geoffrey Kendrick, the bank’s global head of digital assets research, notes that Bitcoin is currently in a unique position where geopolitical tensions drive prices down, while the chances of former US President Donald Trump securing electoral victory may enhance Bitcoin’s outlook post-election.
“Concerns over risks in the Middle East are likely to push BTC below $60,000 before the weekend. However, the interplay with Trump’s electoral prospects suggests that this dip should be seen as a buying signal.”
The Role of Bitcoin in Geopolitical Turmoil
Kendrick also pointed out that Bitcoin has not performed as a safe haven asset amidst geopolitical tensions, unlike traditional investments such as gold. Instead, Bitcoin’s behavior tends to align more with the stock market during uncertain times.
Hedging Against Financial System Risks
Contrarily, Bitcoin has demonstrated resilience as a hedge against systemic financial risks, such as the sustainability of US Treasuries and bank failures, like that of Silicon Valley Bank, earlier this year. Kendrick emphasized that BTC’s responses to geopolitical factors are closely linked to overall market volatility and rising uncertainties, reinforcing its role as a financial hedge rather than a geopolitical one.
Impact of 2024 Presidential Elections on Bitcoin
Among Kendrick’s notable observations is how the upcoming US presidential election may influence Bitcoin’s price movements.
Recent Electoral Odds
Data from Polymarket indicates a slight increase in Donald Trump’s chances of winning the 2024 election, juxtaposed against a decline for Vice President Kamala Harris. This dynamic effectively sets the race at a near 50/50 scenario.
Kendrick highlighted a unique market phenomenon where the weight of geopolitical issues tends to drag Bitcoin prices down, yet improved odds for Trump’s re-election could potentially uplift Bitcoin’s prospects following the election. A Republican win, given Trump’s favorable views on the crypto sector, could indicate positive trends for Bitcoin.
Rising Bitcoin Options Activity
Moreover, Kendrick noted a significant increase in Bitcoin options activity on Deribit.
Open interest for options with a strike price set at $80,000, expiring December 27, surged by 1,300 BTC in just two days, indicating that investors are preparing for a potential price recovery by year-end.
Despite the immediate challenges, Kendrick suggests that the current dip below $60,000 could be a strategic entry point for those anticipating a rebound in the medium term. The ongoing interplay of geopolitical fears and electoral outcomes is expected to keep Bitcoin’s volatility high in the upcoming weeks.