Bitcoin bulls have had a good year so far. If the US defaults on its debt, things could get even better, at least in terms of its Bitcoin investments.
So says Geoff Kendrick, head of digital assets research at Standard Chartered. He insiders said this week that a US default – which he described as a “low-probability, high-impact event” – could cause bitcoin to skyrocket by around $20,000, up almost 70% from current levels.
Bitcoin started the year well below $17,000 but is now hovering near $30,000. That’s still a long way off its all-time high of nearly $69,000 in November 2021, and some investors who bought Bitcoin back then are no doubt still licking their wounds.
Bitcoin, Kendrick predicted, would do well even if all cryptocurrencies, which trade more like stocks, didn’t. “So actually the optimal trade would probably be Long Bitcoin, Short Ethereum. That kind of mix would probably be a good way to describe it,” Kendrick told Insider.
On Monday, Kendrick said in a note Bitcoin could reach $100,000 by the end of 2024 and the “crypto winter” was over. He added that Bitcoin has benefited from its status as a “branded safe haven, perceived relative store of value and means of remittance.”
bitcoin price shot earlier this year after Silicon Valley Bank collapsed and fears of a banking crisis increased.
Meanwhile, the debt ceiling crisis has deepened. On Wednesday, House Republicans passed laws (hardly) that would raise the government’s debt ceiling in exchange for spending restraint. In the coming weeks, they will try to reach a compromise with President Joe Biden that would allow the nation to cancel its debt.
If the US defaulted on its debt this summer, the consequences for America and the world would be severe. Last month, Treasury Secretary Janet Yellen the legislature warned that “a default on our debt would trigger an economic and financial catastrophe”.
Few believe it will come to that.
But even without a US default, many Bitcoin bulls see good things ahead. Cathie Wood, CEO of ARK Invest said in February that in five years bitcoin “is going to hit about $670,000, something like that, and then by 2030, when we see more use cases and more of these insurance policies being taken out against fiscal and political systems that aren’t healthy, we think that it could exceed $1 million.”
Bitcoin, of course, has many critics and doubters. Mark Mobius, the billionaire co-founder of Mobius Capital Partners, predicted in December that Bitcoin would fall to $10,000 sometime this year. He has said of bitcoin“It’s not an investment, it’s a religion.”
earlier this month, Berkshire Hathaway CEO Warren Buffett repeated his longstanding skepticism. “Something like bitcoin is a gambling token and has no intrinsic value,” he told CNBC Squawk box. “But that doesn’t stop people from wanting to play roulette.”
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