Bitcoin (BTC) and the broader digital asset market are positioned for a strong rally following the Federal Reserve’s latest rate cut, according to Geoff Kendrick, head of forex and digital assets research at Standard Chartered.
While the Fed’s decision to cut interest rates by 50 basis points is expected to provide sustained momentum for digital assets, Kendrick cites macroeconomic factors as the primary drivers behind the expected price increase, particularly as he believes these factors will outweigh the uncertainties surrounding the US presidential election in November.
Bitcoin and other digital assets have been performing better since the Federal Open Market Committee (FOMC) met on Wednesday. “Following the FOMC meeting, digital assets are leading the way in terms of performance for the first time in a long time,” Kendrick said in an email today. He attributes this positive market reaction to macroeconomic dynamics that are beginning to overshadow election concerns.
Kendrick noted that the US presidential election is likely to have a lower impact on Bitcoin prices than in previous years. “While the US election is important, macro factors are starting to come to the fore,” Kendrick said. He pointed to the steepening of the US Treasury yield curve, particularly the difference between short-term and long-term bond yields, as a key indicator of favorable conditions for digital assets. “I watch the US 2s10s curve, and a steeper US yield curve is positive for digital assets,” Kendrick said.
The yield curve had inverted since July 2022, signaling potential recession risks. However, the spread between short- and long-term Treasury yields began to turn positive again in late August, a shift that could further support Bitcoin’s price, according to the analyst.
Kendrick also pointed to the potential for increased investment via spot Bitcoin ETFs in the coming months. “Watch for renewed spot Bitcoin ETF inflows in October,” Kendrick said, adding that ETF demand could be a further supportive element for the cryptocurrency market.
Kendrick cautioned, however, that Bitcoin’s price outlook is dependent on macroeconomic conditions remaining favorable. Despite this, he reiterated his prediction that Bitcoin could reach a new all-time high by the end of the year, setting a potential target of $125,000 if former President Donald Trump wins the election and $75,000 if Vice President Kamala Harris wins.
*This is not investment advice.
