Bitcoin bulls have had a good year so far. If the U.S. defaults on its debt, it could get even better, at least in terms of their Bitcoin investment.
Thats according to Geoff Kendrick, Standard Chartereds head of digital assets research. He told Insider this week that a U.S. defaultwhich he called a low-probability, high-impact eventcould cause Bitcoin to jump by about $20,000, an increase of nearly 70% from current levels.
Bitcoin started the year at well below $17,000 but is now hovering near $30,000. Thats still well off its all-time high of nearly $69,000 in November 2021, and some investors who bought Bitcoin around then are no doubt still licking their wounds.
Bitcoin, Kendrick predicted, would fare well even if overall cryptocurrencies, which trade more like stocks, did not. So actually, the optimal trade would probably be long Bitcoin, short Ethereum. That sort of mix would probably be a good expression of this, Kendrick told Insider.
On Monday, Kendrick said in a note Bitcoin could reach $100,000 by the end of 2024 and the crypto winter was over. He added that Bitcoin has benefited from its status as a branded safe haven, a perceived relative store of value and a means of remittance.
Bitcoins price shot up earlier this year after Silicon Valley Bank collapsed and fears of a banking crisis mounted.
Meanwhile the debt ceiling crisis has intensified. On Wednesday, House Republicans passed legislation (barely) that would raise the governments debt ceiling in exchange for spending restrictions. In the weeks ahead, theyll try to reach a compromise with President Joe Biden that would allow the nations debt to be lifted.
If the U.S. did default on its debt this summer, the consequences would be severe for America and the world. Last month, Treasury Secretary Janet Yellen warned lawmakers that a default on our debt would trigger an economic and financial catastrophe.
Few think it will come to that.
But even without a U.S. default, many Bitcoin bulls see good things ahead. ARK Invest CEO Cathie Wood said in February that in five years Bitcoin will hit roughly $670,000, something like that, and then by 2030, as we see more use cases and more of these insurance policies taken out against fiscal and policy regimes that are not healthy, we think it could pass $1 million.
Bitcoin has plenty of critics and doubters, of course. Mark Mobius, the billionaire cofounder of Mobius Capital Partners, predicted in December that Bitcoin would fall to $10,000 at some point this year. He has said of Bitcoin, Its not an investment, its a religion.
Earlier this month, Berkshire Hathaway CEO Warren Buffett reiterated his long-running skepticism. Something like Bitcoin, it is a gambling token, and it doesnt have any intrinsic value, he told CNBCs Squawk Box. But that doesnt stop people from wanting to play the roulette wheel.
