Standard Chartered: Crypto winter over as Bitcoin rebounds

Standard Chartered’s global head of digital asset research, Geoff Kendrick, wrote in a Friday note that Bitcoin’s recent low near $59,000 marked the trough of the market and that “I think we have now seen the low in crypto asset prices,” adding “Winter is over.” Bitcoin later traded above $64,000.

Kendrick calculated the drop represented roughly a 53% decline from a reported October peak of $126,000. He identified two main catalysts for the rebound: hopes for a U.S.-Iran arrangement ahead of the G7 summit and the high-profile initial public offering of SpaceX.

Kendrick linked earlier weakness in crypto to higher energy prices and rising U.S. Treasury yields after conflict in the Middle East tightened oil supplies, making government debt relatively more attractive than risk assets. West Texas Intermediate crude recently traded near $86 a barrel, down about 1.5% on the day.

On the SpaceX IPO, Kendrick pointed to heavy pre-IPO activity in derivatives markets: pre-IPO perpetual contracts for the SpaceX vehicle had amassed more than $240 million in open interest and roughly $220 million in 24-hour volume on a derivatives venue. Market commentary around the IPO has included figures such as a $75 billion capital raise and a potential $1.75 trillion valuation.

He suggested some recent selling from Bitcoin exchange-traded funds, which have recorded about $5 billion in net outflows since mid-May, may reflect investors liquidating crypto positions to free cash for the SpaceX offering.

Kendrick set out three conditions he would watch to confirm a sustained market turnaround: net inflows into Bitcoin ETFs on trading days, a continued decline in oil prices, and a public announcement from a firm called Strategy that it had increased its Bitcoin holdings. Standard Chartered set a $100,000 price target for Bitcoin in February.

At the time of the note, Bitcoin was up about 5% over the prior week and the aggregate market value of tracked cryptocurrencies stood at about $2.277 trillion.