According to Geoff Kendrick, global head of digital asset research at Standard Chartered, a drop in bitcoin (btc) below $60,000 due to escalating geopolitical tensions in the Middle East could offer an excellent buying opportunity.
bitcoin below $60,000, a buying opportunity?
As tensions between Iran and Israel escalate, risk assets like bitcoin may face a slowdown as investors flock to safer investments like gold. However, Kendrick suggests that the possible pullback of digital assets like btc could be an accumulation opportunity.
In a recently shared note, Kendrick commented:
Risk concerns related to the Middle East look set to push bitcoin below $60,000 heading into the weekend, but positions like the $80,000 calls highlighted here and circularity against Trump odds suggest that the fall must be accepted.
Kendrick also noted an increase in call options open interest on Deribit, with an increase of 1,300 btc in the last two days for contracts expiring on December 27 at a strike price of $80,000. This indicates that more traders are betting on a year-end rally for btc, presenting a positive market outlook for the leading cryptocurrency.
The analyst clarified that btc has not yet proven to be a hedge against geopolitical tensions, and that gold still reigns supreme in times of global uncertainty. However, bitcoin is a hedge against traditional finance (TradFi) setbacks, such as banking collapse or de-dollarization.
A Donald Trump victory seen as bullish for digital assets
Kendrick drew attention to the potential impact of the recent Iranian offensive against Israel on the upcoming US presidential election. He said the development has slightly tilted the odds in Trump's favor against Kamala Harris. This can be verified by data on Polymarket, putting Trump's chances of emerging victorious at 50% to Harris' 49%.
Calling it “interesting circularity for bitcoin,” Kendrick explained that while geopolitical tensions could drive down the price of btc in the short term, they increase the odds of Trump winning, subsequently improving the digital asset's post-election prospects.
Trump is widely seen as a pro-cryptocurrency candidate. Recently, he was stained buying hamburgers at a bar in New York City, where he paid with bitcoin.
By contrast, Kamala Harris, the Democratic presidential candidate, is seen with some skepticism from the crypto community. The Biden administration has been criticized for its perceived crackdown on the cryptocurrency industry, prompting many cryptocurrency companies to relocate to more cryptocurrency-friendly countries such as Singapore and the United Arab Emirates.
That said, Harris' recent statements on cryptocurrencies have sparked some optimism. For example, she fiance Invest in America's competitiveness by fostering a more favorable regulatory environment for emerging technologies, including digital assets.
Similarly, cryptocurrency trading firm QCP Capital noted that a Harris victory might not be as bearish as some cryptocurrency investors might fear. btc is trading at $60,090 at the time of publication, down 5.7% in the last 24 hours.
Featured image from Unsplash.com, chart from TradingView.com
