Standard Chartered just delayed its $500,000 Bitcoin price target by two years.
The UK-based bank now expects Bitcoin to top half a million per coin by 2030, instead of 2028, citing three structural changes that have forced the firm to pull back its prediction.
“Price action has forced us to recalibrate our Bitcoin price forecasts,” Geoffrey Kendrick, global head of digital assets research at Standard Chartered, wrote in a research note to investors on December 9.
The forecast comes after Bitcoin dropped nearly 40% from its October 6 all-time high, bringing it all the way down to $90,000.
The drop, while sharp, still falls within the normal expectations for Bitcoin drawdowns since US spot exchange-traded funds launched two years ago, analysts say.
But the revised timeline by Standard Chartered means Bitcoin’s price action warrants a less-than-bullish outlook than what most analysts believe.
Here are the three reasons behind the shift.
DAT buying is over
The biggest change is the perception that treasury companies are done and dusted.
“We think buying by Bitcoin digital asset treasury companies is likely over, as valuations — as measured by mNAVs, the commonly used valuation metric for these companies — no longer support further Bitcoin DAT expansion,” Kendrick wrote.
Although it all began in 2020 with Michael Saylor’s Strategy, the trend really took off this year. Metaplanet, Twenty One Capital, and many others have raised capital to buy Bitcoin.
Their equity traded at massive premiums to the value of their Bitcoin holdings — sometimes 200% or more — allowing them to issue shares and buy more Bitcoin without diluting shareholders.
Until now. Of late, those premiums have all but evaporated.
Strategy, for instance, now trades at a 15% discount to its Bitcoin holdings, and Metaplanet’s premium fell to under 7% from over 230% — while unrealised losses for a number of treasuries nears $1 billion.
Without these premiums, companies can’t raise capital to buy more Bitcoin.
Still, Kendrick expects treasuries to consolidate rather than sell.
The halving cycle is dead
For years, investors and enthusiasts alike have believed that Bitcoin follows a strict, four-year boom-bust cycle.
It goes something like this: Bitcoin’s mining rewards get cut in half every four years in an event dubbed the halving.
Then, prices surge for 12 to 18 months post-halving until Bitcoin hits a new price record. Once it peaks, the crypto crashes from 70% to 90%, entering a multi-year bear market until the next halving kicks off another cycle.
The pattern has held strong for three consecutive cycles, spanning 2012 to 2016, 2016 to 2020, and 2020 to 2024.
Not anymore, says Kendrick.
“We do not share the view that the halving cycle is still valid,” he wrote.
And he’s not alone. A number of crypto industry bigwigs have echoed the sentiment.
Changpeng Zhao, former Binance CEO, said at the Bitcoin MENA conference happening December 8 to 10 that the Bitcoin halving cycle “seems to have ended.”
Cathie Wood of investment firm Ark Invest agrees.
“The four year cycle is going to be disrupted,” Wood told Fox Business on TKTK. “Bitcoin regularly drops 70% to 90%, the volatility is going down, it’s down 35%, and there’s a fear of the four year cycle, but we think the move by institutions into this new asset class is going to prevent much more of a decline.”
ETFs alone fuel rallies
With treasury buying done, and a waning four-year cycle, Bitcoin now relies entirely on ETF flows.
“We now think future Bitcoin price increases will effectively be driven by one leg only — ETF buying,” Kendrick wrote.
Despite momentary outflows — BlackRock’s IBIT recorded record sales in November — for the most part, ETF flows have been relentless. Collectively, the 11 providers hold upwards of $150 billion in Bitcoin, which translates to 6.6% of the network’s total supply.
And Standard Chartered reckons this figure will only balloon further — especially now that the $11 trillion Vanguard has pulled a U-turn and will now start offering ETFs to its clients.
“Longer-term ETF buyers are a much more important price driver.long-term.”
Despite the delay, Standard Chartered maintains conviction in the $500,000 target.
“We still think this target is attainable, as portfolio optimisation between Bitcoin and gold continues to show that global portfolios are underweight Bitcoin,” Kendrick concluded.
Pedro Solimano is DL News’ Buenos Aires-based markets correspondent. Got a tip? Email him atpsolimano@dlnews.com.
