Standard Chartered believes Bitcoin’s (BTC) dip below the $60,000 level is “normal” and called the recent downturn a buying opportunity in an investor note shared with CryptoSlate on Oct. 3.
According to the lender’s global head of digital assets research, Geoffrey Kendrick, Bitcoin is currently trading in an “interesting circularity” where geopolitical tensions are pushing the price down, while the increased odds of former US President Donald Trump winning the elections boost post-election prospects for Bitcoin.
According to Kendrick:
“Risk concerns related to the Middle East seem destined to push BTC below 60k before the weekend. Positions like the 80k call options highlighted here and the circularity vis-à-vis Trump probabilities suggests the dip should be bought into.”
Not a geopolitical hedge
Kendrick highlighted that Bitcoin has not acted as a safe haven against geopolitical concerns, unlike traditional assets such as gold, and continues to perform akin to equities during periods of tension and uncertainty.
Instead, Bitcoin has served as a hedge against systemic financial risks, such as US Treasury sustainability and bank collapses like the one seen in March with Silicon Valley Bank. He noted that BTC’s reaction to geopolitical issues remains consistent as market volatility rises due to uncertainty surrounding the ongoing crisis.
Kendrick referred to a May report by Standard Chartered, in which he assessed that digital assets are an extension of the tech sector. Thus, in a scenario of instability in the traditional financial system, such as bank collapses, de-dollarisation, and issues related to US treasuries, BTC fares well as a hedge.
However, Bitcoin has yet to match gold’s role as a safe-haven asset during times of heightened political risk, such as the current Middle East situation.
Shifting election odds
One of the more intriguing insights from Kendrick’s analysis is the impact of the US presidential election on Bitcoin’s price movement.
Polymarket data showed that former President Donald Trump’s odds for the 2024 election improved by 1% over the past week, while Vice President Kamala Harris saw a 1% decline, effectively making the race a 50/50 contest.
Kendrick pointed to a curious market dynamic where geopolitical concerns weigh down Bitcoin prices, but an increase in Trump’s electoral odds seems to boost Bitcoin’s post-election potential. Given Trump’s positive stance toward the crypto industry in the US, Kendrick sees a Republican win as bullish for Bitcoin.
Options surge
Further emphasizing the link between market sentiment and positioning, Kendrick highlighted a surge in Bitcoin options activity on Deribit.
Open interest for options with a strike price of $80,000 expiring on December 27 increased by 1,300 BTC in the last two days, as illustrated by the chart accompanying his note. This spike in open interest suggests investors are positioning for a possible recovery in BTC prices by the end of the year.
Despite the short-term risks, Kendrick signaled that the dip below $60,000 could present a buying opportunity for those betting on a medium-term rebound. The interplay of geopolitical fears and US elections is expected to remain a key driver of Bitcoin volatility in the weeks ahead.
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