Geoff Kendrick, the head of forex research at Standard Chartered, has predicted that Bitcoin could surge by over $20,000 in the event of a default by the United States government on its debt obligations. Kendrick characterised such a default as a “low-probability, high-impact event” but suggested that due to Bitcoin’s reputation as a safe haven asset, it could jump by around 70%. However, Kendrick did warn that the surge wouldn’t be immediate as there would likely be a price drop of $5,000 before Bitcoin surged by $25,000. Kendrick also suggested that other cryptocurrencies, such as Ethereum, were likely to fall if such an event occurred and that the optimal trade approach would be long Bitcoin and short Ethereum.
Yellen warns of imminent default
Bitcoin’s potential surge comes as Treasury Secretary Janet Yellen warns that the US government may default on its debt obligations as early as June 1 if Congress does not raise or suspend the debt limit. Yellen commented that such an event would lead to an “economic and financial catastrophe” and would have significant global consequences.
Standard Chartered predicts BTC to top $100k
In addition to his predictions around a potential default, Kendrick recently suggested that Bitcoin could top $100,000 by the end of 2024. Among the factors likely to contribute to this jump in price, Kendrick listed US banking turmoil, Bitcoin’s halving event and Federal Reserve rate hikes. However, it’s unclear if Kendrick included the possibility of a US debt default in his analysis.
Investors seek refuge in Bitcoin
The possibility of a US debt default has had an impact on a range of assets, with some investors reportedly turning to Bitcoin and other cryptocurrencies as a potential refuge. Some have speculated that cryptocurrencies may be more insulated from the impact of a default than more traditional assets, such as stocks and bonds.
Despite the current attention on the potential for a US default, it’s worth noting that such an event is still seen as relatively unlikely. However, given the potential impact on global markets if it did occur, it’s understandable that investors are seeking to protect their assets with a range of different approaches – including investing in Bitcoin.
