In recent days, Bitcoin (BTC) and other digital assets have experienced significant declines, driven by a broader macroeconomic sell-off in financial markets. According to a report released by investment bank Standard Chartered, there exists a palpable risk of further weakening due to forced selling among investors.
This market downturn was catalyzed by a hawkish press conference from Federal Reserve Chairman Jerome Powell in mid-December, heightening concerns among market participants. Standard Chartered highlighted that many investors who took on bitcoin exposure after the U.S. election in November are now merely breaking even. This scenario raises the specter of panic selling, particularly involving those who have purchased through exchange-traded funds (ETFs) and major acquirers like MicroStrategy (MSTR).
Geoff Kendrick, head of digital assets research at Standard Chartered, cautioned that “the risk of mark-to-market pain is building.” If Bitcoin can’t maintain support above the crucial $90,000 level, a retracement towards the low $80,000s could be imminent, adversely impacting other digital assets in tandem.
Despite these short-term challenges, Standard Chartered maintains a bullish long-term outlook for Bitcoin, forecasting that it could reach $200,000 by year-end, buoyed by a resurgence of institutional inflows under the potential new Trump administration. The bank advises investors to consider re-entering the market after the anticipated retracement has concluded.
For those keeping an eye on market predictions, the sentiment is echoed by notable figures like Tom Lee, who posits that Bitcoin could soar as high as $250,000 by the end of the year. This optimism underscores the volatile yet continually fascinating nature of digital assets like Bitcoin.
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