Standard Chartered recommends purchasing Bitcoin when priced under $60,000 amid geopolitical instability.

Standard Chartered considers Bitcoin’s (BTC) decline beneath the $60,000 mark to be “normal” and described the recent drop as a buying opportunity in an investor note distributed to CryptoSlate on Oct. 3.

Geoffrey Kendrick, the lender’s global head of digital assets research, stated that Bitcoin is currently experiencing an “interesting circularity,” where geopolitical tensions are exerting downward pressure on the price, while the heightened likelihood of former US President Donald Trump winning the elections enhances post-election prospects for Bitcoin.

Kendrick noted:

“Risk concerns related to the Middle East seem destined to push BTC below 60k before the weekend. Positions like the 80k call options highlighted here and the circularity vis-à-vis Trump probabilities suggests the dip should be bought into.”

Not a geopolitical hedge

Kendrick pointed out that Bitcoin has not functioned as a safe haven against geopolitical issues, in contrast to traditional assets like gold, and continues to behave similarly to equities during times of tension and uncertainty.

Rather, Bitcoin has acted as a safeguard against systemic financial risks, such as the sustainability of US Treasuries and bank failures like that of Silicon Valley Bank in March. He observed that BTC’s response to geopolitical matters remains steady as market volatility increases due to uncertainty surrounding the ongoing crisis.

Kendrick referenced a May report by Standard Chartered, in which he evaluated that digital assets are an extension of the technology sector. Therefore, in a scenario of instability within the traditional financial system, including bank failures, de-dollarisation, and issues related to US Treasuries, BTC performs well as a hedge.

Nonetheless, Bitcoin has not yet achieved gold’s status as a safe-haven asset during periods of heightened political risk, such as the current situation in the Middle East.

Shifting election odds

One of the more compelling insights from Kendrick’s analysis is the influence of the US presidential election on Bitcoin’s price fluctuations.

Polymarket data indicated that former President Donald Trump’s chances for the 2024 election improved by 1% over the past week, while Vice President Kamala Harris experienced a 1% decrease, effectively rendering the race a 50/50 contest.

Kendrick highlighted an intriguing market dynamic where geopolitical concerns depress Bitcoin prices, yet an increase in Trump’s electoral odds appears to enhance Bitcoin’s post-election potential. Given Trump’s favorable view of the crypto industry in the US, Kendrick perceives a Republican victory as positive for Bitcoin.

Options surge

Further underscoring the connection between market sentiment and positioning, Kendrick noted a rise in Bitcoin options activity on Deribit.

Open interest for options with a strike price of $80,000 expiring on December 27 increased by 1,300 BTC in the past two days, as shown by the chart accompanying his note. This increase in open interest indicates that investors are preparing for a potential recovery in BTC prices by year-end.

Despite the short-term risks, Kendrick indicated that the dip below $60,000 could offer a buying opportunity for those anticipating a medium-term rebound. The interaction of geopolitical anxieties and US elections is expected to continue being a significant factor in Bitcoin volatility in the coming weeks.

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