This economic event could send Bitcoin to $50k by end of summer 2023
The global economy is currently focused on the possible United States default as a standoff over raising borrowing limits prevails.
In the event of such a historical default, market analysts are projecting a potential direct impact on Bitcoin’s (BTC) value considering the digital currency has established a level of correlation with the traditional finance sector.
In this line, Geoff Kendrick, Head of FX Research at Standard Chartered, believes that Bitcoin can soar by about $20,000 to hit around $49,000 from the current value or a 68% growth if the debt ceiling is not raised by the estimated deadline of July and a default occurs, Business Insider reported on April 29.
Kendrick stated that Bitcoin has a reputation for performing well in periods of stress and is often seen as a safe haven due to its decentralized nature.
However, the analyst expects some volatility, noting that Bitcoin might not rally in a straight line while projecting a dip of about $5,000 before rebounding again.
At the same time, he pointed out that while other cryptocurrencies like Ethereum (ETH) may trade more like stocks and fall in a default, Bitcoin’s behavior as a safe haven makes it an optimal trade.
“So actually, the optimal trade would probably be long Bitcoin, short Ethereum. That sort of mix would probably be a good expression of this,” Kendrick said.
Despite the stalemate between lawmakers on raising the debt ceiling, Kendrick stated it is a “low-probability, high-impact event.”
Bitcoin capitalizing on stressful moments
Indeed, if Bitcoin manages to rally in the event of default, it would be the second time this year that crypto is taking advantage of the traditional finance sector fallout to rally. Notably, Bitcoin retested the $30,000 level after the banking sector crisis acted as a catalyst.
In general, Kendrick expressed his bullishness towards Bitcoin, predicting it could rally to $100,000 by the end of 2024 due to various factors, including banking turmoil, Bitcoin halving, and the anticipated end of Fed rate hikes.
“While sources of uncertainty remain, we think the pathway to the USD 100,000 level is becoming clearer,” he said.
Bitcoin price analysis
Bitcoin is currently attempting to reclaim the $30,000 position as the asset faces increased volatility. By press time, Bitcoin was trading at $29,254, representing weekly gains of about 7%.
The asset’s one-day technical analysis retrieved from TradingView has turned bullish. A summary of the gauges recommends the ‘buy’ sentiment at 14 while moving averages are for a ‘strong buy’ at 13. On the other hand, oscillators are ‘neutral’ at 9.
Overall, Bitcoin’s recent price action has expressed positive sentiment but has not been enough to break through the next significant resistance region. However, if BTC claims the crucial price level of $30,000, it could indicate an extended bullish rally in the near future.
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