As reported by CoinDesk, Standard Chartered’s recent research delves into the implications of U.S. fiscal policies and their potential impact on the cryptocurrency market. The investment bank’s analysis suggests that the growing risk of U.S. fiscal dominance, characterized by the monetization of government debt by the Federal Reserve, could bolster the appeal of cryptocurrencies as alternative assets.
Standard Chartered highlights a scenario where increasing fiscal dominance might lead to a supportive environment for cryptocurrencies like Bitcoin. According to the bank’s report, such economic conditions could make Bitcoin an attractive hedge against potential de-dollarization and waning confidence in the U.S. Treasury market. Geoff Kendrick, an analyst at Standard Chartered, notes that this situation would likely result in a steeper nominal 2-year/10-year U.S. Treasury curve, a greater increase in breakevens compared to real yields, and a rise in term premium. Notably, Kendrick points out that the Bitcoin price has a positive correlation with these potential financial developments.
The prospect of Donald Trump winning a second term as U.S. President could also influence the cryptocurrency landscape significantly. Standard Chartered suggests that a second Trump administration might accelerate the withdrawal of foreign official buyers from the U.S. Treasury market due to fiscal concerns, a trend that was evident during Trump’s first term. The bank contrasts the average annual net selling of U.S. government debt during Trump’s presidency ($207 billion) with that during Biden’s ($55 billion), illustrating a substantial difference that could impact fiscal policies and market reactions.
Further, the bank anticipates that Trump’s potential reelection could lead to a more supportive regulatory environment for digital assets. This support could manifest in looser regulations and the approval of U.S. spot Exchange Traded Funds (ETFs) for other cryptocurrencies, which would likely provide a significant boost to the market. This proactive support, combined with the passive boost from de-dollarization, positions Bitcoin and other digital assets for potentially increased valuation and broader adoption.
According to CoinDesk’s article, Standard Chartered maintains an optimistic outlook on Bitcoin’s price amid these analyses, reiterating its target of $150,000 by the end of the year and $200,000 by the end of 2025.
