Gold prices cool after hitting over 2-week high on Fed independence fears
Investing.com -- Geoffrey Kendrick of Standard Chartered (LON:STAN) has highlighted Bitcoin’s primary function as a hedge against risks to the financial system, underpinned by its decentralized ledger.
This protection comes into play through two main avenues: private sector risks, such as the collapse of Silicon Valley Bank in March 2023, and government sector risks, including those related to US Treasury.
Kendrick notes that outside of these risk periods, Bitcoin’s trading pattern often aligns with that of major technology stocks, collectively known as the Magnificent Seven (Mag7). The current concerns regarding the independence of the Federal Reserve, particularly with the potential replacement of Jerome Powell, fall into the category of government sector risks.
The impact of these government-related risks is measurable through the US Treasury term premium, which has reached a 12-year high for the 10-year term premium. Since the beginning of 2024, the correlation between Bitcoin and the term premium has been notably strong.
Recently, Bitcoin has not kept pace with the rise in the term premium, a lag that Kendrick attributes to the previous narrative that tariffs would negatively affect technology stocks, and Bitcoin’s tendency to mirror their performance. However, Kendrick believes that as long as issues regarding the Fed’s independence persist, Bitcoin is likely to continue its upward trajectory, potentially reaching new all-time highs.
Reiterating his forecasts for Bitcoin, Kendrick maintains a target of $200,000 by the end of 2025 and $500,000 by the end of 2028. He emphasizes that the dominant narratives around Bitcoin change over time, and the cryptocurrency serves multiple roles in investment portfolios.
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