Bitcoin could jump nearly 70% if the US defaults on its debt.

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Both the bond and equities markets have gotten uneasy as a result of the imminent debt limit crisis, which shows no signs of ending soon.

However, while some investors worry about a historic default, one asset may be able to survive it: Bitcoin.

Geoff Kendrick, head of FX analysis at Standard Chartered, described a US default as a “low-probability, high-impact event,” adding that it might force the price of bitcoin to soar by roughly $20,000, such as 68% from its current price.

He claimed that’s because the most valuable cryptocurrency by market capitalization has a track record of outperforming rivals under pressure and is frequently regarded as a safe haven since it’s a decentralized asset.

In contrast, Kendrick believes that Bitcoin would not increase in value in a straight line in the scenario of a US default, stating that “It probably comes a bit lower on day one, day two, or week.” In that case, he predicted that Bitcoin would initially decline by $5,000 before soaring by $25,000.

He also noted that not all cryptocurrencies would behave in the same way as Bitcoin, with some, like Ethereum, trading more like equities and likely experiencing a default.

A default might occur later in the summer if Congress fails to raise the $31.4 trillion federal debt ceiling, which would have a seismic impact on world financial markets. The US economy would suffer greatly from a default, Treasury Secretary Janet Yellen warned on Tuesday, leading to widespread unemployment, missed payments, and higher rates “into perpetuity.”

Three-month Treasury rates recently increased to a 22-year high, as they would mature around a hypothetical default date, with House Republicans and the White House still far from an agreement to raise the debt ceiling.

But as First Republic Bank’s troubles rekindled concerns about the financial sector, bitcoin has increased by almost 80% so far in 2023 and has recently been trading close to $30,000.

Kendrick, for his part, is already a supporter of Bitcoin and predicted in a note on Monday that it will reach $100,000 by the end of 2024 as a result of, among other things, bank turbulence, the halving of Bitcoin, and the anticipated end to Fed rate hikes. However, the statement omitted the possibility of a US default.

Although there are still some sources of uncertainty, he wrote, “We believe the pathway to the USD 100,000 level is becoming clearer.”

 

Bitcoin Long (Buy)
Enter at: 30669.99
T.P_1: 34362.12
T.P_2: 37576.48
T.P_3: 42333.72
T.P_4: 48070.90
T.P_5: 52165.21
S.L: 19369.38

 

 

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