STANCHART: Bitcoin has 12% upside potential before the US election
Standard Chartered Bank's research shows that Bitcoin may rise by 12% to $73,800 before the US presidential election. Research director Geoff Kendrick pointed out that regulatory exemptions obtained by the Bank of NY Mellon and MicroStrategy's plans have turned them into "Bitcoin banks," which will drive up the price of Bitcoin. He believes that although the importance of the election results has diminished, both a Trump or Harris victory would be beneficial to the cryptocurrency industry
For over six months, Bitcoin bulls have been waiting for another historic high. STANCHART Bank stated that this may finally come in the next few weeks.
In a new study, Geoff Kendrick, head of digital asset research at STANCHART Bank, estimated that before the November U.S. presidential election, Bitcoin could reach $73,800, a 12% increase from the current level.
To support this point, Kendrick referenced the change in the stock multiple of Bitcoin and MicroStrategy (stock multiple = total assets ÷ total common shares outstanding). MicroStrategy is known for accumulating a large amount of Bitcoin, with its reserves recently reaching 252,000 coins.
As shown in the chart below, after trading relatively in sync with the Bitcoin price (green line) throughout 2024, the MicroStrategy stock multiple (blue line) has surged. Kendrick stated that two fundamental factors causing this premium may drive Bitcoin higher, and over time, the gap between the two will narrow.
The first factor is the news last month that the Bank of NY Mellon obtained an exemption from Statement of Financial Accounting Standards No. 121 (SAB 121), an unpopular legislation that forces traders to list the cryptocurrencies they hold on their balance sheets. Relaxing regulations is generally seen as a favorable factor for Bitcoin.
Secondly, the exemption from SAB 121 is closely related to MicroStrategy's announcement of plans to become a "Bitcoin bank" in the future, offering Bitcoin capital market tools. Kendrick expects that future exemptions may allow the company to earn income by lending out Bitcoin.
"To me, the connection between the two is that as the broader digital asset ecosystem becomes more legitimate/accessible, the MicroStrategy stock multiple will rise," Kendrick said.
In Kendrick's view, the outcome of the U.S. election is secondary to these bullish forces, although a victory for either Trump or Harris would be a positive sign for the cryptocurrency industry.
He wrote, "As the U.S. election approaches... the broader digital asset ecosystem is indeed becoming more likely to go mainstream."
Kendrick had previously stated that both presidential candidates would boost cryptocurrencies in the long run, but a victory for Trump would be more favorable of the two outcomes. If the Republican candidate returns to the White House, Kendrick estimates that by the end of 2024, the price of Bitcoin could soar to $125,000