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StanChart cautions of potential further decline for Bitcoin over the weekend similar to August 2024.
Commonplace Chartered cautioned that Bitcoin (BTC) could potentially decline further to between $69,000 and $76,500 in the upcoming two days, continuing its recent trend of negative weekends.
According to the bank’s head of digital asset research, Geoffrey Kendrick, the downside risk is influenced by ongoing ETF outflows and increasing hedge fund short positions.
ETF outflows and hedge fund shorts
Kendrick elaborated on the growing concerns regarding the market’s recent weakness and expressed disappointment over the lack of extended breaks experienced by other markets.
He stated:
“It’s at the end of weeks like this that digital asset participants wish the asset class were closed for the weekend.”
He further noted that Bitcoin’s decline below $80,000 — once a significant resistance level following Trump’s election victory — raises questions about the extent of the sell-off.
Kendrick’s analysis indicated that substantial ETF activity could signal further declines. He pointed out that Bitcoin ETF outflows nearly reached $1 billion on February 25, marking a critical threshold. Despite the considerable outflows, Kendrick believes the selling pressure is not yet over.
He also emphasized a growing disconnect between ETF positioning and hedge fund short exposure based on CFTC data.
Kendrick observed that since the US election, ETF positions increased from $23.5 billion to a peak of $40.2 billion — now down to $37.0 billion — while hedge fund shorts rose from $7.9 billion to $11.3 billion as of February 18.
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Kendrick remarked:
“ETF positions are up 71% since November 5, but hedge fund shorts have only increased by 43%. This suggests there’s still a significant amount (the majority) of outright longs in the ETFs. To the extent these are driven by underlying retail flow, I believe they remain vulnerable to panic selling.”
Geopolitical and regulatory uncertainty
Kendrick reiterated his earlier warning regarding downside risks, indicating that Bitcoin’s critical convexity risk level of $90,000 has been surpassed.
Earlier in the week, he stated:
“While BTC trades relatively well within the digital asset complex, it’s now caught up in the broader risk-off sentiment.”
Kendrick added that lower US Treasury yields might provide long-term support, even as near-term sentiment remains negative, but he advised against buying the dip before a more definitive downturn.
Looking ahead to the weekend, Kendrick expressed doubt that risk assets would experience a rally given the impending geopolitical tensions and tariff implementations.
He commented:
“It’s probably fair to assume we’ve had the Trump tariff noise now… But are risk assets really going to rally into the weekend now that we’ve had the bad news? I doubt it.”
Recalling a similar period in August 2024 — when panic selling drove Bitcoin below $50,000 after a rapid 5.5% drop — he noted that another decline of similar magnitude could see Bitcoin fall into the $69,000 to $76,500 range.
The post StanChart warns of further downside for Bitcoin over the weekend akin to August 2024 appeared first on CryptoSlate.
