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StanChart suggests that Trump’s possible comeback may lead to a significant increase in alternative investments such as Bitcoin.
A recent report from Standard Chartered predicts that a second term for Donald Trump could significantly enhance Bitcoin and other digital assets as credible alternative investments.
The report examines how US fiscal policies under a possible Trump administration might direct investors towards Bitcoin and other cryptocurrencies.
Additionally, the bank has updated its forecast regarding Bitcoin’s price trajectory in the upcoming months, asserting that the leading cryptocurrency reached its local bottom on May 1.
StanChart analyst Geoffrey Kendrick informed CryptoSlate:
“I am pleased to admit I was overly pessimistic about BTC‘s drop below 60k last week… Conditions are improving, and we have likely witnessed the low (at 56.5k on May 1).”
Kendrick further mentioned that the revision of the outlook was influenced by a “less hawkish than anticipated FOMC and a favorable US jobs report,” which have sufficiently stimulated inflows into spot Bitcoin ETFs after a record week of outflows.
Standard Chartered reiterated its target of $150,000 per Bitcoin by the end of 2024, increasing to $200,000 by the end of 2025. These optimistic targets depend on various factors, including global fiscal conditions, US electoral results, and the changing regulatory environment impacting digital currencies.
Trump 2.0
The StanChart report suggests that Trump’s expected presidency would likely foster a regulatory framework favorable to digital assets.
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The report highlights potential legislative changes, such as the approval of US spot exchange-traded funds (ETFs) for cryptocurrencies, representing a significant shift from existing regulatory practices. These developments would enhance accessibility and legitimacy for Bitcoin and similar assets, potentially drawing a wider range of institutional and retail investors.
Reflecting on fiscal trends from Trump’s previous term, the report observed that foreign official US Treasury (UST) buyers notably reduced their holdings, with net selling averaging $207 billion annually.
In contrast, during Biden’s administration, this figure fell to an average of $55 billion per year. The report speculates that Trump’s re-election could amplify these trends, accelerating a transition from US Treasuries to alternative financial assets like Bitcoin and gold.
Digital gold?
The report also analyzed Bitcoin in relation to gold, framing the leading cryptocurrency as a non-traditional financial asset with parallels to gold’s role as a hedge.
It clarified that Bitcoin, akin to gold, generally performs well as a hedge against traditional financial assets during periods of banking distress or when central banks undertake substantial monetary expansion. For instance, the price of Bitcoin surged by $10,000 following the collapse of Silicon Valley Bank in March 2023, illustrating its capacity to serve as a safe haven during financial turmoil.
However, the report also highlighted a significant distinction between Bitcoin and gold — BTC does not perform as effectively during times of increased geopolitical risk, whereas gold typically retains or appreciates its value during such periods.
The report partially attributed this difference to Bitcoin’s association with the tech sector, which can exhibit greater volatility and sensitivity to global tensions.
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